Filed On 4/29/03 2:51pm ET · SEC Files 2-29081, 811-01653 · Accession Number 820027-3-321
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
4/29/03 Ids Life Variable Annuity Fund A 485BPOS 5/01/03 8:70 Ameriprise Financial Inc
Ids Life Variable Annuity Fund A
Document/Exhibit Description Pages Size
1: 485BPOS Ids Life Variable Annuity Fund A 60 410K
2: EX-99 Exhibit Index 1 6K
3: EX-99.5 IMS AGMNT Investment Management Services Agreement 3 17K
4: EX-99.10 OPIN COUNSL Opinion of Counsel and Consent 1 9K
5: EX-99.11 AUD CONSENT Consent of Independent Auditors 1 6K
6: EX-99.17C PWR ATTY Ids Life Variable Annuity Fund A Power of 1 6K
Attorney
7: EX-99.17E PWR ATTY Ids Life Insurance Company Power of 2 15K
Attorney
8: EX-99.17F PWR ATTY Ids Life Insurance Company Power of 1 6K
Attorney
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 68 (File No. 2-29081) [X]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 29 (File No. 811-1653) [X]
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IDS Life Variable Annuity Fund A (Individual and Employer)
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70100 AXP Financial Center, Minneapolis, MN 55474
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(612) 671-3678
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Mary Ellyn Minenko - 50607 AXP Financial Center, Minneapolis, MN 55474
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Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 2003 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1) of rule 485
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Section 24-F of the Investment Company
Act of 1940.
PROSPECTUS
MAY 1, 2003
IDS LIFE
VARIABLE ANNUITY
FUND A
INDIVIDUAL VARIABLE ANNUITY CONTRACTS AND VARIABLE ANNUITY CONTRACTS FOR
EMPLOYER PLANS
ISSUED BY: IDS LIFE INSURANCE COMPANY
70100 AXP Financial Center
Minneapolis, Minnesota 55474
Telephone: (800) 862-7919
IDS Life Variable Annuity Fund A (the Fund) is a segregated asset account of IDS
Life Insurance Company (IDS Life). The investment objective of the Fund is
long-term capital appreciation. The Fund invests primarily in common stocks of
U.S. corporations. The Fund also may invest in preferred stocks and in corporate
and government bonds.
This prospectus describes the following types of individual non-qualified,
variable annuity contracts offered by IDS Life in this prospectus:
- an annuity for non-qualified retirement or deferred compensation plans or
programs adopted by an employer;
- an installment payment deferred annuity;
- a single payment deferred annuity; and
- a single payment immediate annuity.
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED. This prospectus gives you facts
about the Fund. You should read it and keep it with your investment records for
future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS ANNUITY IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS ANNUITY
INVOLVES RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
Variable annuities are complex investment vehicles. Be sure to ask your sales
representative about the variable annuity's features, benefits, risks and fees.
This prospectus provides a general description of the contract. Your actual
contract and any riders or endorsements are the controlling documents. IDS Life
has not authorized any person to give any information or to make any
representations regarding the contract other than those contained in this
prospectus. Do not rely on any such information or representations.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
1
TABLE OF CONTENTS
SUMMARY OF CONTENTS 3
FINANCIAL HIGHLIGHTS 4
THE VARIABLE ANNUITY 5
INVESTMENT OBJECTIVE 5
PRINCIPAL RISKS 5
NON-FUNDAMENTAL POLICIES 6
FUNDAMENTAL POLICIES 6
PORTFOLIO MANAGER 6
INVESTMENT AGREEMENT 7
BROKERAGE 7
THE CONTRACTS 7
THE FIXED ACCOUNT 8
AUTOMATED TRANSFERS AND PARTIAL SURRENDERS 8
MEASURING THE VALUE OF YOUR CONTRACT 9
VALUING FUND ASSETS 9
WHEN WE CREDIT YOUR PURCHASE PAYMENTS 10
VALUING AN ACCUMULATION UNIT 10
VALUING AN ANNUITY UNIT 10
ANNUITY PAYMENT STARTING DATE 11
TABLE OF SETTLEMENT RATES 11
ANNUITY PAYMENT PLANS 12
THE CHARGES YOU PAY 13
SURRENDERING YOUR CONTRACT 14
MAKING WITHDRAWALS ON YOUR CONTRACT 14
SPECIAL RULES IF THE ANNUITANT DIES BEFORE
THE ANNUITY PAYMENT STARTING DATE 15
YOUR RIGHT TO CANCEL INSTALLMENT CONTRACTS 15
TAXES 15
VOTING RIGHTS 16
MANAGEMENT 17
OTHER INFORMATION 19
IDS LIFE INSURANCE COMPANY FINANCIAL INFORMATION 21
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
2
SUMMARY OF CONTENTS
In this prospectus, "we," "us," "our" and "IDS Life" refer to IDS Life Insurance
Company.
ABOUT THE VARIABLE ANNUITY: IDS Life offers variable annuities for sale through
the Fund, a diversified open-end management investment company. Variable annuity
contracts guarantee regular payments to contract purchasers. The amount of these
payments is influenced by the performance of the securities in which the Fund
invests (page 5).
FINANCIAL HIGHLIGHTS: This table shows important financial information you will
need to evaluate the Fund's performance (page 4).
INVESTMENT OBJECTIVE: The Fund's investment objective is long-term capital
appreciation in order to build up values and to make annuity payments. The Fund
invests primarily in common stock and also may invest in preferred stock and in
government and corporate bonds. The Fund may invest in foreign securities,
futures contracts and options. There is no guarantee that the Fund will achieve
its investment objective because any investment involves risk (page 5).
PORTFOLIO MANAGER: Doug Chase manages the Fund (page 6).
INVESTMENT AGREEMENT: The Fund is a segregated asset account of IDS Life, a
stock life insurance company. American Express Financial Corporation (AEFC)
manages the investments of the Fund pursuant to an Investment Management
Services Agreement. Under this agreement, AEFC receives a management fee equal
to 0.4% of the Fund's average daily net assets for each year (page 7).
CONTRACTS: This prospectus describes the following types of individual
non-qualified variable annuity contracts:
- An individual variable annuity contract for use in connection with
non-qualified retirement or deferred compensation plans or programs adopted
by an employer. These plans or programs are not intended to qualify under
Sections 401, 403, or 408 of the Internal Revenue Code of 1986, as amended
(the Code). Under this contract, you make an annual purchase payment. The
payment must be at least $300 per year if your retirement date is 10 years or
more from your application date. If your retirement date is less than 10
years from your application date, the payment must be large enough so that
payments total at least $3,000 by your retirement date.
You also can choose from several optional settlement plans. However, if at
the annuity payment starting date the accumulation value of the contract is
less than $2,000, IDS Life may pay the accumulation value in a lump sum;
- A single payment deferred annuity that you purchased by making an initial
payment of at least $3,000;
- A single payment immediate annuity that you purchased by making an initial
payment of at least $3,000; and
- An installment payment deferred annuity that you purchased by making 10 or
more annual payments that total at least $300 (page 7).
CONTRACT OWNER: The annuitant is the owner, unless your application says
otherwise, or if you later transfer ownership of the contract to someone else.
If the contract was purchased by an employer in connection with a deferred
compensation plan, the employer is the exclusive owner of all rights under the
contract. When the contract refers to the employer as "an annuitant," it is
solely for purposes of identification. IDS Life pays all funds payable under the
contract to the employer. IDS Life does not issue certificates to any employee
of an employer who has entered into a deferred compensation agreement. Any
employee participating in a deferred compensation plan should refer to the
deferred compensation agreement with the employer for information on any
additional charges in connection with the plan.
TRANSFERS BETWEEN ACCOUNTS: Before the annuity payment starting date, you may
give IDS Life written or telephone instructions to transfer the contract value
of your investment between the fixed account and the variable account. Transfers
must be for at least $50 and will go into effect when IDS Life then records it
at its home office (page 8).
CHARGES YOU PAY: IDS Life will deduct a combined sales and administrative charge
from payments you make into the Fund.
For the individual variable annuity contract used with non-qualified plans
adopted by an employer, the deduction is 5.75% of the first $10,000 paid into
the Fund, 4% of the next $40,000 and 2% of all amounts in excess of $50,000
(page 13).
For the other three individual annuity contracts, if you made a single payment,
the deduction is 8% of the first $15,000, 5% of the next $10,000 and 2% of any
further amounts. If you chose to make installment payments, the deductions
average 8.7% over the first 10 years. You may lose money if you surrender your
individual installment contract too soon because the percentage that IDS Life
deducts is higher in the earlier years (20% for the first year of an installment
payment contract, 18% for the second and third contract years, 7% for the fourth
year and 4% thereafter) (page 13).
Additionally, IDS Life may deduct for premium taxes imposed on us by state and
local governments. State premium taxes range from 0 to 3.5% of the gross
purchase payments (page 13).
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
3
SURRENDERING YOUR CONTRACT: You can surrender all or part of a deferred annuity
contract any time before the annuity payment starting date by giving IDS Life
written or telephone instructions. IDS Life will cash in the number of
accumulation units or fixed dollar accumulation value required for the amount of
money you request. IDS Life will give accumulation units the accumulation unit
value it determines on the date IDS Life receives your request. However, you
can't surrender part of your contract if the remaining accumulation value is
less than $20. You cannot make any surrenders after annuity payments have
started. You will pay income tax on the taxable part of your surrender and you
may have to pay an IRS penalty tax on early withdrawal if you surrender part or
all of your contract before reaching age 591/2.
A surrender may result in adverse tax consequences. You should consult a tax
advisor before making a surrender request (page 14).
FEDERAL TAX INFORMATION: According to current interpretations of federal income
tax law, generally there is no federal income tax on any increase in your
annuity's value until you receive a distribution. Under certain circumstances,
IRS penalty taxes may apply (page 15).
ADDITIONAL INFORMATION: For information about the Fund's history, organization
and headquarters as well as information about IDS Life and AEFC, see page 19.
FINANCIAL HIGHLIGHTS
FROM JAN. 1, 1993 TO DEC. 31, 2002
[Enlarge/Download Table]
YEAR ENDED DEC. 31, 2002 2001 2000 1999 1998 1997
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Accumulation unit value at beginning of year $ 24.54 $ 30.54 $ 32.26 $ 24.53 $ 20.91 $ 17.04
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INCOME FROM INVESTMENT OPERATIONS(a):
Net investment income (loss) (.03) (.10) (.20) (.20) (.14) (.12)
Net gains (losses) (both realized and unrealized) (5.90) (5.90) (1.52) 7.93 3.76 3.99
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Total from investment operations (5.93) (6.00) (1.72) 7.73 3.62 3.87
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Accumulation unit value at end of year $ 18.61 $ 24.54 $ 30.54 $ 32.26 $ 24.53 $ 20.91
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Total return(b) (24.16%) (19.65%) (5.33%) 31.51% 17.31% 22.71%
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RATIOS/SUPPLEMENTAL DATA
Total contract owner's equity
at end of year (000 omitted $212,651 $316,867 $429,472 $493,966 $406,987 $379,553
Ratio of operating expenses
to average daily net assets 1.40% 1.40% 1.40% 1.40% 1.40% 1.40%
Ratio of net investment income (loss)
to average daily net assets (.14%) (.39%) (.59%) (.71%) (.63%) (.62%)
Portfolio turnover rate 195%(c) 76% 85% 5% 19% 33%
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YEAR ENDED DEC. 31, 1996 1995 1994 1993
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Accumulation unit value at beginning of year $ 13.93 $ 10.27 $ 10.70 $ 9.77
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INCOME FROM INVESTMENT OPERATIONS(a):
Net investment income (loss) (.07) (.02) .03 (.02)
Net gains (losses) (both realized and unrealized) 3.18 3.68 (.46) .95
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Total from investment operations 3.11 3.66 (.43) .93
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Accumulation unit value at end of year $ 17.04 $ 13.93 $ 10.27 $ 10.70
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Total return(b) 22.33% 35.64% (4.01%) 9.50%
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RATIOS/SUPPLEMENTAL DATA
Total contract owner's equity
at end of year (000 omitted $327,778 $284,407 $223,317 $241,623
Ratio of operating expenses
to average daily net assets 1.40% 1.40% 1.40% 1.40%
Ratio of net investment income (loss)
to average daily net assets (.43%) (.19%) .27% (.17%)
Portfolio turnover rate 13% 46% 63% 64%
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(a) Per accumulation unit value amounts have been calculated using average
accumulation unit values outstanding method.
(b) Total return does not reflect payment of a sales charge.
(c) Higher turnover rates may result in higher brokerage expenses. A portfolio
management change and investment opportunities in July led to increased
portfolio turnover during the fiscal year.
This table pertains to accumulation units only. When you begin to receive your
annuity payments, accumulation units change to annuity units. The value of an
annuity unit (assuming a 3.5% investment rate) was $5.66 as of Dec. 31, 2002,
$7.73 as of Dec. 31, 2001, $9.95 as of Dec. 31, 2000, $10.88 as of Dec. 31,
1999, $8.56 as of Dec. 31, 1998, $7.55 as of Dec. 31, 1997, $6.37 as of Dec. 31,
1996, $5.39 as of Dec. 31, 1995, $4.11 as of Dec. 31, 1994 and $4.44 as of Dec.
31, 1993. The value of an annuity unit (assuming a 5% investment rate) was $3.43
as of Dec. 31, 2002, $4.75 as of Dec. 31, 2001, $6.20 as of Dec. 31, 2000, $6.88
as of Dec. 31, 1999, $5.49 as of Dec. 31, 1998, $4.92 as of Dec. 31, 1997, $4.21
as of Dec. 31, 1996, $3.61 as of Dec. 31, 1995, $2.80 as of Dec. 31, 1994 and
$3.06 as of Dec. 31, 1993.
The information in this table is derived from financial statements of the Fund
that have been audited by Ernst & Young LLP, independent auditors. The
independent auditor's report and additional information about the performance of
the Fund are in the Fund's annual report, which you can obtain without charge if
it is not included with this prospectus.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
4
THE VARIABLE ANNUITY
An annuity is a contract with a life insurance company that guarantees regular
income to the purchaser. Most people buy annuities to provide income in their
retirement years. When many people think of an annuity, they think of a fixed
dollar annuity. With a fixed dollar annuity, the insurance company bears the
risk of investment gain or loss and guarantees payment of an exact monthly
amount. A variable annuity also guarantees you regular payments. However, the
amount of the payments will fluctuate with the performance of the securities in
which the annuity fund invests. So if the securities go up in value, you may
receive larger annuity payments. If they go down, you may receive smaller
annuity payments.
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term capital appreciation. There is no
guarantee the Fund will achieve its investment objective because any investment
involves risk. IDS Life can change the Fund's investment objective without the
approval of the Fund's contract holders, but IDS Life has no intention of doing
so.
The Fund invests primarily in U.S. common stocks. The Fund also may invest in
preferred stocks and in corporate and government bonds. Some bonds issued by
agencies of the U.S. government are not supported by the full faith and credit
of the United States.
The Fund may invest up to 30% of its total assets at the time of purchase in
foreign securities. In selecting foreign investments, the Fund generally will
seek to invest in companies that it anticipates will experience economic growth
at least as great as that anticipated in the U.S. companies in which it invests.
The securities that the Fund believes offer attractive opportunities for
investment may change from time to time.
The Fund may use derivative instruments from time to time. However, at this
time, the use of such instruments is not a principal strategy of the Fund.
For temporary purposes, the Fund may make certain investments. It may buy
short-term U.S. and Canadian government securities. It may invest in bank
obligations including negotiable certificates of deposit, non-negotiable fixed
time deposits, bankers' acceptances and letters of credit. The Fund may buy
short-term corporate notes and obligations rated in the top two classifications
or the equivalent by Standard and Poor's or Moody's.
PRINCIPAL RISKS
Please remember that you may lose money. Principal risks associated with an
investment in the Fund include:
- Market Risk
- Style Risk
- Issuer Risk
MARKET RISK
The market may drop and you may lose money. Market risk may affect a single
issuer, sector of the economy, industry, or the market as a whole. The market
value of all securities may move up and down, sometimes rapidly and
unpredictably.
STYLE RISK
The Fund's management strategy will influence performance significantly. Large
capitalization stocks as a group could fall out of favor with the market,
causing the Fund to underperform funds that invest primarily in small or medium
capitalization stocks. If the manager's stock selection strategy does not
perform as expected, the Fund could underperform its peers.
ISSUER RISK
The risk that an issuer, or the value of its stocks or bonds, will perform
poorly. Poor performance may be caused by poor management decisions, competitive
pressures, breakthroughs in technology, reliance on suppliers, labor problems or
shortage, corporate restructurings, fraudulent disclosures or other factors.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
5
NON-FUNDAMENTAL POLICIES
No more than 5% of the Fund's net assets can be used at any one time for good
faith deposits on futures and premiums for options on futures that do not offset
existing investment positions.
The Fund will not buy securities on margin (use borrowed money to buy
securities) or sell short. With short sales, an investor sells a security that
it does not own in anticipation of a decline in the market value of the
security. To complete the transaction, the investor must borrow the security to
make delivery to the buyer. The investor is obligated to replace the security
that was borrowed by purchasing it at the market price on the replacement date.
The price at such time may be more or less than the price at which the investor
sold the security.
The Fund will not invest in illiquid securities if more than 10% of the Fund's
net assets would be invested in such securities.
The Fund may invest its assets in an open-end management investment company
(another fund) having substantially the same investment objectives, policies and
restrictions as the Fund for the purpose of having those assets managed as part
of a combined pool.
The Board of Managers of the Fund can change the investment policies described
above without the consent of contract holders.
FUNDAMENTAL POLICIES
The Fund observes the following fundamental investment restrictions, that cannot
change without approval by a vote of the contract holders:
- The Fund will not borrow money or property except as a temporary measure for
extraordinary or emergency purposes, and in an amount not exceeding
one-third of the market value of its total assets (including borrowings)
less liabilities (other than borrowings) immediately after the borrowing.
- The Fund will not underwrite securities of other issuers, except as allowed
by applicable law.
- The Fund will not concentrate in any one industry.
- The Fund may invest up to 10% of its total assets, taken at cost, in real
properties, but will not do so as a principal activity.
- The Fund will not invest more than 5% of its total assets, at market value,
in securities of any one company, government or political subdivision. The
limitation will not apply to investments in securities issued by the U.S.
government, its agencies or instrumentalities. Up to 25% of the Fund's total
assets may be invested without regard to this 5% limitation.
- The Fund will not purchase securities of any issuer if immediately after,
and as a result of a purchase, the Fund would own more than 10% of the
outstanding voting securities of the issuer.
- The Fund may not make cash loans if the total commitment amount exceeds 5%
of the Fund's total assets.
- The Fund will not buy or sell physical commodities unless acquired as a
result of ownership of securities or other instruments. This will not
prevent the Fund from buying or selling options and futures contracts or
from investing in securities or other instruments backed by, or whose value
is derived from, physical commodities.
PORTFOLIO MANAGER
Doug Chase, portfolio manager, joined AEFC in 2002. He is portfolio manager of
AXP Large Cap Equity Fund, IDS Life Variable Annuity Fund B and AXP Variable
Portfolio - Capital Resource Fund. Prior to joining AEFC, he worked as an
analyst and portfolio manager at Fidelity Investments where he managed the
Fidelity Export and Multinational Fund and was a member of the team that managed
several other funds. He joined Fidelity Investments in 1992. Doug has a BA in
economics from the University of California and an MBA from the University of
Michigan-Ann Arbor.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
6
INVESTMENT AGREEMENT
AEFC is the Fund's investment manager. Under the Investment Management Services
Agreement between AEFC and the Fund, AEFC charges a fee for managing the Fund's
investments. This amounts to 0.4% of the Fund's average daily net assets for the
year. In addition to paying its own management fee, the Fund also pays all
brokerage commissions and charges in the purchase and sale of assets. Brokerage
charges are paid to AEFC for reimbursement of charges incurred in the purchase
and sale of foreign securities.
An Investment Management Services Agreement was approved by the contract holders
on Nov. 13, 2002. The agreement will continue each year as long as it is
approved:
- by a majority of the Board of Managers of the Fund or a majority of the
outstanding votes of the Fund, and
- by a majority of the Board of Managers of the Fund who are not "interested
persons" of AEFC.
All votes by the Board of Managers must be taken at a meeting called
specifically to approve or disapprove the agreement and all votes must be cast
in person.
AEFC or the Fund may cancel the agreement without penalty, provided it gives 60
days' notice in writing. If the Fund decides to cancel its management agreement
with AEFC, it must have the approval of either the Board of Managers or a
majority of the votes of contract holders. If there is any assignment of the
agreement, it ends immediately.
The Fund operates under an order from the SEC that permits AEFC, subject to the
approval of the Board of Managers, to appoint a subadviser or change the terms
of a subadvisory agreement for the Fund without first obtaining contract holder
approval. The order permits the Fund to add or change unaffiliated subadvisers
or the fees paid to subadvisers from time to time without the expense and delays
associated with obtaining contract holder approval of the change.
BROKERAGE
Under the Investment Management Services Agreement, AEFC has responsibility for
making the Fund's investment decisions, for executing trades for the Fund's
portfolio and for negotiating any brokerage commissions. The Fund paid total
brokerage commissions for each of the last three years as follows: $1,697,258
for 2002, $590,023 for 2001 and $331,476 for 2000. AEFC intends to continue to
examine and consider ways to reduce brokerage costs.
The Investment Management Services Agreement generally requires AEFC to use its
best efforts to obtain the best available price and the most favorable
execution. However, brokerage firms may provide some extra services, including
economic or investment research and analysis. Sometimes it may be desirable to
compensate a broker for research or brokerage services by paying a commission
that it might not otherwise charge or a commission in excess of what another
broker might charge. The Board of Managers has adopted a policy authorizing AEFC
to do so to the extent authorized by law, if AEFC determines, in good faith,
that the amount of commission is reasonable in relation to the value of the
brokerage or research services provided by the broker.
In purchases and sales of securities involving transactions not listed on an
exchange or in listed securities that are traded off of the exchange, the Fund
will deal with a market maker as principal, or a broker as agent, depending upon
the method AEFC believes will produce the best available price and most
favorable execution as described above. In transactions with a broker who acts
as principal, commissions generally are not stated separately, but are included
in the price of the securities.
AEFC gives investment advice to a number of investment companies and mutual
funds. Where more than one of these companies or funds are interested in the
same securities at the same time, AEFC carries out the sale or purchase in a way
that all agree in advance is fair.
Sharing in a large transaction may affect the price or volume of shares
acquired. But by these transactions, the Fund hopes to gain an advantage in
execution.
The Fund may pay brokerage commissions to broker-dealer affiliates of AEFC and
American Express Company.
THE CONTRACTS
This prospectus describes the following types of individual non-qualified
variable annuity contracts:
- AN INDIVIDUAL VARIABLE ANNUITY CONTRACT. This contract was offered for sale
in connection with an employer plan that, as of Dec. 8, 1981, had already
purchased one or more Fund annuity contracts. These plans or programs are
not intended to qualify under Sections 401, 403, or 408 of the Code. Your
purchase payment for this contract is made by a number of annual payments.
- INSTALLMENT PAYMENT -- DEFERRED ANNUITY. You make purchase payments in
installments over a number of years. Annuity payments begin at some future
date after you have paid all installments.
- SINGLE PAYMENT -- DEFERRED ANNUITY. You made a single purchase payment.
Annuity payments are deferred until some future date.
- SINGLE PAYMENT -- IMMEDIATE ANNUITY. You made a single purchase payment.
Annuity payments started within 60 days after IDS Life approved your
application.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
7
THE FIXED ACCOUNT
You also may allocate purchase payments and transfers to the fixed account. We
back the principal and interest guarantees relating to the fixed account. These
guarantees are based on the continued claims-paying ability of the company. The
value of the fixed account increases as we credit interest to the account.
Purchase payments and transfers to the fixed account become part of our general
account. We credit interest daily and compound it annually. The interest rate we
apply to each purchase payment or transfer to the fixed account is guaranteed
for one year. Thereafter, we will change the rates from time to time at our
discretion. These rates will be based on various factors including, but not
limited to, the interest rate environment, returns earned on investments backing
these annuities, the rates currently in effect for new and existing company
annuities, product design, competition, and the company's revenues and expenses.
Interests in the fixed account are not required to be registered with the SEC.
The SEC staff does not review the disclosures in this prospectus on the fixed
account. Disclosures regarding the fixed account, however, may be subject to
certain generally applicable provisions of the federal securities laws relating
to the accuracy and completeness of statements made in prospectuses.
If you have a deferred annuity contract, you can change your mind from time to
time and apply all or part of your future purchase payments to the fixed
account.
Also, the contract provides that once each contract year, you can transfer
accumulation values of at least $250 from the variable account to the fixed
account or from the fixed account to the variable account. This right ends 30
days before annuity payments begin. Presently, IDS Life does not intend to limit
the number of transfers from the variable account to the fixed account; however,
IDS Life limits transfers from the fixed account to the variable account to one
per contract year. Just write or telephone IDS Life and indicate the dollar
amount, percentage of, or number of variable accumulation units to transfer from
the Fund or the amount of fixed dollar accumulation value to transfer to the
Fund.
AUTOMATED TRANSFERS AND PARTIAL SURRENDERS
IDS Life currently allows deferred annuity contract holders to establish:
- automated transfers of contract values between the fixed account and
variable account; or
- automated partial surrenders of contract values.
Both services can be in effect at the same time. You can establish them through
a one-time written or telephone request to IDS Life.
The minimum transfer amount from any account or partial surrender amount from
the contract is $50. You can make the transfer or surrender on a monthly,
quarterly, semiannual or annual basis. You may start or stop this service at any
time but you must give IDS Life 30 days' notice to change any automated transfer
or surrender instructions that are currently in place. Automated transfers or
partial surrenders are subject to all of the other contract provisions and terms
including provisions relating to the transfer of money between accounts. They
are not available for 1969 Series Contracts that were issued prior to May 1971.
Automated transfers from the fixed account may not exceed an amount that will
deplete the fixed account within 12 months. If you have made any type of
transfer from the fixed account, you may not transfer contract values from the
variable account back to the fixed account until the next contract anniversary.
The balance in your account from which you make an automated transfer or
automated partial surrender must be sufficient to satisfy your instructions. If
not, IDS Life will suspend your entire automated arrangement until the balance
is adequate. If IDS Life must suspend your arrangement for six months, IDS Life
reserves the right to discontinue the arrangement in its entirety.
Automated partial surrenders may result in income taxes and IRS penalty taxes
being applied to all or a portion of the amount surrendered. See the sections on
tax charges and surrendering your contract (page 15).
For more information regarding surrenders, see page 14.
Under some contracts, applicable law may restrict automated partial surrenders.
When automated partial surrenders are in effect, additional purchase payments
may not be appropriate and, therefore, are not permitted.
IDS Life has the authority to honor any telephone requests believed to be
authentic and will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. As long as IDS
Life follows the procedures IDS Life and its affiliates will not be liable for
any loss resulting from fraudulent requests. IDS Life will process your transfer
and/or partial surrender request on the valuation date (any normal business day,
Monday through Friday, that the New York Stock Exchange (NYSE) is open) after we
receive it. At times when the volume of telephone requests is unusually high,
IDS Life will take special measures to ensure that your call is answered as
promptly as possible. IDS Life will not allow a telephone surrender request
within 30 days of a phoned-in address change.
You may request that telephone withdrawals not be authorized from your account
by writing IDS Life.
Consult your tax advisor if you have any questions about the taxation of your
annuity.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
8
MEASURING THE VALUE OF YOUR CONTRACT
Because values are always changing with the performance of the Fund's
investments, it is not easy to measure value with a variable annuity contract.
For this reason, IDS Life uses a technique that involves "units." IDS Life
measures the performance of the Fund by changes in the value of a single unit,
rather than the total value of the Fund. There are two kinds of units. As long
as you are paying into the Fund they are called "accumulation units." When you
begin to receive your annuity payments, they change to "annuity units."
- Accumulation units are used to measure the value of deferred annuity
contracts during the period before IDS Life makes annuity payments to you.
Here is the formula:
NUMBER OF YOUR VALUE OF ONE TOTAL
ACCUMULATION X ACCUMULATION = ACCUMULATION
UNITS UNIT VALUE
If you bought a deferred annuity contract, IDS Life credited your purchase
payments as accumulation units to your contract.
- Annuity units determine the value of each annuity payment. If you bought an
immediate annuity contract, IDS Life credited your purchase payment as
annuity units to your account.
Under a deferred annuity contract, when annuity payments begin, IDS Life will
convert your accumulation value into annuity units. From then on, your annuity
payments are based on the current annuity unit value. Here is the formula:
NUMBER OF YOUR X ANNUITY UNIT = VALUE OF ONE
ANNUITY UNITS VALUE ANNUITY PAYMENT
DATES WE REVALUE UNITS -- VALUATION DATE
IDS Life values your units at least once every seven days. At the present time,
IDS Life values your units each business day at the close of trading on the
NYSE. During an emergency, the Fund can suspend redemption. Those emergency
situations would occur if:
- The NYSE closes for reasons other than the usual weekend and holiday
closings, or trading on the NYSE is restricted,
- Disposal of the Fund's securities is not reasonable, or it is not reasonably
practical for the Fund to determine the fair value of its net assets, or
- The SEC under the provisions of the Investment Company Act of 1940 (1940
Act) declares a period of emergency to exist.
SPLITTING UNITS
IDS Life can split accumulation or annuity units. We will do so only if it is in
the best interests of the contract holders, the annuitants and IDS Life.
THE VALUATION PERIOD
The valuation period starts after the close of business (when the NYSE closes,
normally 3 p.m. Central time) on one valuation date and ends with the close of
business on the next valuation date.
VALUING FUND ASSETS
We determine the net value of the Fund's assets at the start of each valuation
period by taking the total value of the Fund's assets and subtracting
liabilities. The net asset value per share generally changes each day. We value
Fund securities as follows:
- We value securities traded on national securities exchanges at the last
quoted sales price on that day. If a particular security hasn't been traded
on a certain day, we take the average price between the last bid (offer to
buy) and the last asked (offer to sell) price.
- We also value securities with readily available market quotations but
without a listing on an exchange at the average between the last bid and the
last asked price.
- We value short-term securities maturing more than 60 days from the valuation
date at the market price or approximate market value based on current
interest rates. We value short-term securities maturing in 60 days or less
but that originally had maturities of more than 60 days at the acquisition
date on an amortized cost basis using the market value on the 61st day
before maturity. We value short-term securities maturing in 60 days or less
at the acquisition date at amortized cost. Amortized cost is an
approximation of market value determined by systematically increasing the
carrying value of a security if acquired at a discount, or systematically
reducing the carrying value if acquired at a premium, so that the carrying
value is equal to maturity value on the maturity date.
- We value securities and other assets without a ready market price at fair
value. The Board of Managers is responsible for using valuation methods that
they believe give fair value. In cases like this, they may use an outside
organization to value these securities. These organizations may use methods
that take into consideration yields, trading characteristics and other
market data.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
9
WHEN WE CREDIT YOUR PURCHASE PAYMENTS
IDS Life credits each purchase payment at the end of the valuation period during
which we receive it at our home office.
VALUING AN ACCUMULATION UNIT
IDS Life uses accumulation units to measure the value of your contract during
the period before annuity payments begin. We determine the value of an
accumulation unit by multiplying the accumulation unit value for the last
valuation period by the net investment factor for the current period. Here is
how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for your account
we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value equals the last
value times the account's current investment factor.
WE DETERMINE THE INVESTMENT FACTOR BY:
- Calculating the current net value of the Fund's assets, excluding the fee
IDS Life charges for bearing the risk of increases in life expectancy and
administrative expenses ("mortality and expense risk assurance fee");
- Dividing that amount by the previous net value of the Fund's assets; and
- Subtracting the amount representing the mortality and expense risk assurance
fee from the result.
Because the net asset value of the Fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk.
FACTORS THAT AFFECT VARIABLE ACCOUNT ACCUMULATION UNITS:
Accumulation units may change in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
- additional purchase payments you allocate to the Fund;
- transfers into or out of the Fund; and/or
- partial surrenders.
Accumulation unit values will fluctuate due to:
- changes in the Fund's net asset value;
- interest and dividends earned by the Fund;
- net realized and unrealized capital gains or losses of the Fund;
- Fund operating expenses; and/or
- mortality and expense risk assurance fee.
VALUING AN ANNUITY UNIT
When you are ready to receive annuity payments, IDS Life exchanges your
accumulation units for annuity units. Annuity units measure each variable
annuity payment. To determine the value of an annuity unit, we multiply the
annuity unit value on the last valuation date by the product of (1) the
investment factor for the current period, and (2) the neutralizing factor.
The neutralizing factor removes the assumed investment rate that is built into
the variable annuity tables in your contract. The neutralizing factor for a
one-day valuation period is 0.999866, when the usual 5% assumed investment rate
is used.
The assumed investment rate is not always 5%. For example, contracts subject to
Texas law cannot use more than a 3.5% investment rate. You can request a 3.5%
investment rate by sending a written request to IDS Life at its home office. The
current policy of IDS Life is to grant a request received no later than 30 days
before settlement.
Why would you want a lower assumed investment rate? The value of an annuity unit
will rise or fall to the extent that the actual investment rate for the period
is more or less than the assumed investment rate. A lower assumed rate produces
a lower initial annuity payment, but later payments will rise faster if unit
values are going up. Later payments will fall more slowly if unit values are
dropping.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
10
ANNUITY PAYMENT STARTING DATE
For INDIVIDUAL DEFERRED CONTRACTS PAID FOR IN ANNUAL INSTALLMENTS, the annuity
payment starting date must be at least 10 years after the date of your
application. You can change the payment date at any time not less than 30 days
before annuity payments are to start.
For SINGLE PAYMENT DEFERRED CONTRACTS, the annuity payment starting date was at
least 60 days after the application date.
For IMMEDIATE CONTRACTS, the annuity payment starting date was no later than 60
days after the application date.
For EMPLOYER PLANS, the annuity starting date must be at least so many years
after the application date that the number of years multiplied by the annual
purchase payment equals or exceeds $3,000.
For ALL CONTRACTS the annuity payment starting date must come before (whichever
one is later):
- the contract anniversary nearest the annuitant's 75th birthday, or
- the 30th contract anniversary.
TABLE OF SETTLEMENT RATES
The Progressive Annuity Table in your contract shows the amount of the first
monthly payment for each $1,000 of contract value according to the adjusted age
and, when applicable, the sex of the annuitant.
Adjusted age is equal to the annuitant's birthday nearest the settlement date
minus any adjustment depending on the calendar year of birth of the annuitant as
follows:
[Download Table]
ADJUSTMENT FOR
CALENDAR YEAR OF ANNUITANT'S BIRTH MALE FEMALE
Prior to 1920 0 4
1920 through 1939 1 5
1940 through 1954 2 6
1955 through 1969 3 7
After 1969 4 8
In NATHALIE NORRIS, ET. AL. V. ARIZONA GOVERNING COMMITTEE FOR TAX DEFERRED
ANNUITY AND DEFERRED COMPENSATION PLANS, ET AL., the United States Supreme Court
decided that Title VII of the Civil Rights Act of 1964 prohibits an employer
from offering its employees the option of receiving retirement benefits from one
of several companies selected by the employer, all of which pay a woman lower
monthly retirement benefits than a similarly situated man. The Court ordered
that all retirement benefits derived from contributions made on and after Aug.
1, 1983, must be calculated without regard to the sex of the annuitant.
IDS Life has been administering contributions received since Aug. 1, 1983, on
the company's in-force annuity contracts to provide retirement benefits without
regard to the sex of the annuitant in those markets which are affected by the
Norris decision. IDS Life also has amended certain contracts in order to assure
continued compliance by employers with the obligations imposed on them by the
Norris decision.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
11
ANNUITY PAYMENT PLANS
You may have selected on the application how you want annuity payments made and
when the payments are to begin. If you have a deferred annuity contract, you may
change your payment plan at any time at least 30 days before the annuity payment
starting date.
Here are the plans available for all annuity contracts as described in this
prospectus:
PLAN A: LIFE ANNUITY -- NO REFUND: We make monthly payments until the
annuitant's death. Payments end with the last payment before the annuitant's
death; we will not make any further payments. This means that if the annuitant
dies after we have made only one monthly payment, we will not make any more
payments.
PLAN B: LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payments for a guaranteed payment period of five, ten or 15 years that you
elect. This election will determine the length of the payment period to the
beneficiary if the annuitant should die before the elected period has expired.
We calculate the guaranteed payment period from the retirement date. If the
annuitant outlives the elected guaranteed payment period, we will continue to
make payments until the annuitant's death.
PLAN C: LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payments until the
annuitant's death, with our guarantee that payments will continue for some
period of time. We will make payments for at least the number of months
determined by dividing the amount applied under this option by the first monthly
payment, whether or not the annuitant is living.
PLAN D: JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payments while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payments at the full amount
until the death of the surviving annuitant. Payments end with the death of the
second annuitant.
A beneficiary of a variable annuity contract may ask for a lump-sum payment
under Plan B or Plan C. IDS Life will not grant the request if you asked us not
to.
If you have not selected a plan by the annuity payment starting date, Plan B
with 120 guaranteed monthly payments will be used.
Contract values that you have allocated to the fixed account will provide
fixed-dollar payments while the remaining contract values will provide variable
annuity payments.
If the value of the contract is less than $2,000 on the annuity payment starting
date, IDS Life may pay the accumulation value in a lump sum.
DETERMINATION OF MONTHLY ANNUITY PAYMENTS FOR DEFERRED CONTRACTS
When annuity payments are to begin, IDS Life computes the first monthly variable
annuity payment on the valuation date on or right before the seventh day before
the annuity payment starting date.
IDS Life makes the computations using the table of settlement rates in your
contract unless we agree on an optional table. IDS Life uses a different table
if you elected a 3.5% assumed investment rate. We divide the amount of the first
payment by the annuity unit value to give the number of annuity units for your
contract.
IDS Life will determine each monthly payment after the first one by multiplying
the number of annuity units by the current annuity unit value. IDS Life will
compute variable annuity payments on the valuation date on or right before the
seventh day before the annuity payment date.
Here is an example: Assume the variable accumulation value on the valuation date
seven days before the annuity payment starting date was $30,000 and the plan you
selected produces an initial payment of $6 for each $1,000 of accumulation
value. Ignoring premium taxes, if any, the first payment would be $180 (30 X $6
= $180).
Now assume the annuity unit value on the valuation date seven days before the
annuity payment starting date is $1.800000. The number of annuity units for your
contract is 100 ($180 DIVIDED BY $1.800000 = 100). Ordinarily, IDS Life will pay
the value of the same number of annuity units each month.
DETERMINATION OF MONTHLY ANNUITY PAYMENTS FOR IMMEDIATE CONTRACTS
IDS Life multiplied the number of your annuity units by the value of one unit.
IDS Life determined the value of one unit on the valuation date on or right
before the seventh day before the annuity payment was due. The following example
shows how we determined the number of your annuity units:
Assume the net purchase payment was $30,000 and the conversion factor, based on
actuarial tables and the contract you selected, is $5.50.
Assume the value of one annuity unit on the valuation date was $1.500000.
First divide the net purchase payments by $1,000: $30,000 DIVIDED BY $1,000 =
$30. Next, multiply the answer by the conversion factor: $30 X $5.50 = $165.
Divide the answer by the value of one unit. This gives the number of annuity
units paid out each month: $165 DIVIDED BY $1.500000 = 110 units.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
12
THE CHARGES YOU PAY
1) SALES AND ADMINISTRATIVE CHARGES
The tables below show the deductions from your purchase payments for sales and
administrative charges. The net amount invested is the total purchase payments
minus the deduction for sales and administrative charges.
SINGLE PAYMENT CONTRACTS
[Download Table]
TOTAL CHARGE TOTAL DEDUCTION
PART OF THE DEDUCTION DEDUCTION FOR AS PERCENTAGE OF AS PERCENTAGE OF
TOTAL PURCHASE FOR SALES ADMINISTRATIVE TOTAL PURCHASE NET AMOUNT
PAYMENT CHARGE CHARGE PAYMENT INVESTED
First $15,000 6.0% 2.0% 8.0% 8.70%
Next $10,000 4.0 1.0 5.0 5.26
Over $25,000 1.5 0.5 2.0 2.04
INSTALLMENT PAYMENT CONTRACTS (OTHER THAN EMPLOYER PLAN CONTRACTS)
[Enlarge/Download Table]
TOTAL CHARGE TOTAL DEDUCTION
DEDUCTION DEDUCTION FOR AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT EQUIVALENT TO STATED FOR SALES ADMINISTRATIVE TOTAL PURCHASE NET AMOUNT
ANNUAL PAYMENT AMOUNT CHARGE CHARGE PAYMENT INVESTED
1st stated annual payment 18.0% 2.0% 20.0% 25.00%
2nd and 3rd stated annual payment 16.0 2.0 18.0 21.95
4th stated annual payment 5.0 2.0 7.0 7.53
5th and after stated annual payment 2.0 2.0 4.0 4.17
If kept through 10 years 6.7 2.0 8.7 9.53
EMPLOYER PLAN -- ANNUAL PURCHASE CONTRACTS
[Download Table]
TOTAL CHARGE TOTAL DEDUCTION
PART OF THE DEDUCTION DEDUCTION FOR AS PERCENTAGE OF AS PERCENTAGE OF
TOTAL PURCHASE FOR SALES ADMINISTRATIVE TOTAL PURCHASE NET AMOUNT
PAYMENT CHARGE CHARGE PAYMENT INVESTED
First $10,000 3.75% 2.0% 5.75% 6.10%
Next $40,000 2.0 2.0 4.0 4.17
Excess over $50,000 0.5 1.5 2.0 2.04
Under a Distribution and Services Agreement with the Fund, IDS Life is the
principal underwriter and performs all sales and administrative duties. It pays
salaries, sales commissions, legal, accounting, auditing or actuarial fees, and
death benefits under deferred variable annuity contracts. The deductions for
sales and administrative charges came to $45,869 for 2002, $55,248 for 2001 and
$61,824 for 2000.
IDS Life may reduce or eliminate the sales and administrative charge, but only
to the extent IDS Life anticipates that we will incur lower sales and
administrative expenses or perform fewer services. Generally, this will occur
with programs established by an employer for all employees or for all employees
in a class, under which employees do not individually enroll in the program.
2) PREMIUM TAXES
Some state and local governments impose a premium tax on IDS Life in an amount
of up to 3.5%. If a state or local government requires IDS Life to pay a premium
tax on your contract, IDS Life may deduct it from your purchase payments or from
your contract's accumulation value.
3) MORTALITY AND EXPENSE RISK ASSURANCE FEE
IDS Life will bear any expenses that occur because of an increase in
administrative expenses, or because of an increase in the life expectancy of
people receiving variable annuity payments. But, it is not responsible for
increases in brokers' fees and transfer taxes on the purchase and sale of
assets.
For bearing this risk, IDS Life charges the Fund a fee equal to 1% of the Fund's
average daily net assets for the year. This came to $2,583,530 for 2002,
$3,496,055 for 2001 and $5,093,495 for 2000.
If the fee is more than enough to cover the increases, IDS Life will keep the
difference. If the fee is not enough, IDS Life bears the loss.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
13
4) CHARGE FOR INVESTMENT MANAGEMENT
For acting as investment manager, AEFC charges the Fund a fee equal to 0.4% of
the Fund's average net assets for the year, less any brokerage credits. This
came to $1,034,772 for 2002, $1,399,304 for 2001 and $2,035,854 for 2000. For
periods prior to Dec. 1, 2002, the fee was paid to IDS Life as investment
manager.
5) TAX CHARGES
IDS Life is taxed as a life insurance company under Subchapter L of the Code.
IDS Life treats the Fund as part of IDS Life for federal income tax purposes.
IDS Life must pay all taxes that come about because of the Fund. For this
reason, IDS Life can charge the Fund for tax charges. Under current federal
income tax law, no taxes are payable with respect to any income of the Fund.
Investment results credited to a contract are not taxed until you receive
annuity benefits.
SURRENDERING YOUR CONTRACT
You can surrender all or part of your annuity contract any time before the
annuity payment starting date. There is no surrender charge for either partial
or full surrenders. You cannot surrender the contract in whole or in part after
annuity payments have started.
For a discussion of automated partial surrenders, see page 8.
Make your request to IDS Life in writing. IDS Life will cash in the number of
accumulation units for the amount you request. The units are valued at the next
accumulation unit value calculated after IDS Life receives your request in our
home office. You cannot surrender part of your contract if the remaining
accumulation value will be less than $20, and you cannot repay any amount you
surrender. IDS Life usually will mail a check to you within seven days after we
process your request. However, IDS Life can delay sending your check until we
are sure we have received good payment for the accumulation units you want to
surrender.
You may receive extra money if the Fund's state premium tax liability is reduced
as a result of your surrender. If it is, you will receive either the amount of
the reduction or the amount already deducted from your purchase payments for
premium taxes, whichever is less.
Your surrender may result in adverse tax consequences. Consult a qualified tax
advisor before requesting a surrender.
MAKING WITHDRAWALS ON YOUR CONTRACT
You can make a temporary withdrawal on your contract any time before the annuity
payment starting date. The least you can withdraw, including charges, is $250.
The most you can withdraw is the sum of your purchase payments less any amounts
you previously surrendered. You cannot have more than one temporary withdrawal
outstanding at any one time. IDS Life will charge you 2% of your withdrawal at
the time of withdrawal in order to cover our administrative costs.
You must pay your withdrawal back within two years. IDS Life will use your
repayment to buy accumulation units at their current price. However, you cannot
make a repayment after the annuity payment starting date. There are no sales
charges. If you do not pay your withdrawal back within two years, IDS Life will
regard it as if you surrendered that part of your contract.
HOW DO YOU REPAY YOUR WITHDRAWAL? Inform IDS Life in writing. Otherwise IDS Life
will use your regular purchase payments toward repayment. What is left after you
fully repay your withdrawal will go toward your regular purchase payments. Any
amount of your purchase payment left over after repayment must be at least $10.
- EXAMPLE: You make a withdrawal of $295 and your next purchase payment is
$300. Instead of applying $295 toward the withdrawal and $5 toward the
purchase payment, we will apply $290 toward the withdrawal and $10 toward
the purchase payment. Now you owe $5 on your withdrawal. IDS Life will take
out this amount next time you make a payment.
Keep track of all your withdrawals and surrenders. If your accumulation value
falls to zero, IDS Life will close your account.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
14
SPECIAL RULES IF THE ANNUITANT DIES BEFORE THE ANNUITY PAYMENT STARTING DATE
Under a deferred annuity contract, if the annuitant dies before annuity payments
begin, the beneficiary will receive the greater of:
- the sum of all purchase payments minus surrenders and unrepaid withdrawals;
or
- the accumulation value of the contract.
If the annuitant dies on or after the contract anniversary date nearest his or
her 75th birthday, IDS Life will pay only the accumulation value to the
beneficiary.
IF YOU DIE BEFORE YOUR RETIREMENT DATE: When paying the beneficiary, we will
process the death claim on the valuation date our death claim requirements are
fulfilled. We will determine the contract's value at the next accumulation unit
value calculated after our death claim requirements are fulfilled. We pay
interest, if any, at a rate no less than required by law. We will mail payment
to the beneficiary within seven days after our death claim requirements are
fulfilled.
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the annuity payment
starting date, your spouse may keep the contract as owner. To do this your
spouse must, within 60 days after we receive proof of death, give us written
instructions to keep the contract in force.
IF YOUR BENEFICIARY IS NOT YOUR SPOUSE, we will pay the beneficiary in a single
sum unless you give us other written instructions. We must fully distribute the
death benefit within five years of your death. However, the beneficiary may
receive payments under any annuity payment plan available under this contract
if:
- the beneficiary asks us in writing within 60 days after we receive proof of
death; and
- payments begin no later than one year after your death, or other date as
permitted by the Code; and
- the payment period does not extend beyond the beneficiary's life or life
expectancy.
YOUR RIGHT TO CANCEL INSTALLMENT CONTRACTS
You will receive a Statement of Charges and a Notice of Cancellation Rights
within 60 days after the contract is sent to you. You will have 45 days from the
time this notice was sent to you to cancel your installment contract. You will
receive the current accumulation value of your account plus any amounts deducted
for taxes and charges.
TAXES
Generally, under current law, your contract has a tax-deferral feature. This
means any increase in the value of your contract is taxable to you only when you
receive a payment or surrender (see detailed discussion below). Any portion of
the annuity payments and any surrenders you request that represent ordinary
income normally are taxable. IDS Life will send you a tax information reporting
form for any year in which IDS Life made a taxable distribution according to its
records.
Tax law requires that all nonqualified deferred annuity contracts issued by the
same company (and possibly its affiliates) to the same owner during a calendar
year be taxed as a single, unified contract when you take distributions from any
one of those contracts.
ANNUITY PAYMENTS: A portion of each payment will be ordinary income and subject
to tax, and a portion of each payment will be considered a return of part of
your investment and will not be taxed. Under Annuity Payment Plan A: Life
annuity - no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year of the annuitant. Under all other annuity payment plans, where the
annuity payments end before your investment in the contract is fully recovered,
the remaining portion of the unrecovered investment may be available as a
federal income tax deduction to the taxpayer for the tax year in which the
payments end. (See "Annuity Payment Plans.") All amounts you receive after your
investment in the contract is fully recovered will be subject to tax.
SURRENDERS: If you surrender part or all of your contract before your annuity
payments begin, your surrender payment will be taxed to the extent that the
value of your contract immediately before the surrender exceeds your investment.
You also may have to pay a 10% IRS penalty for surrenders you make before
reaching age 591/2 unless certain exceptions apply.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a contract is not tax
exempt. Any amount your beneficiary receives that represents previously deferred
earnings within the contract is taxable as ordinary income to the beneficiary in
the year he or she receives the payments.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
15
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR TRUSTS: Any annual increase in
the value of annuities held by such entities generally will be treated as
ordinary income received during that year. This provision is effective for
purchase payments made after Feb. 28, 1986. However, if the trust was set up for
the benefit of a natural person only, the income will remain tax deferred.
PENALTIES: In general, if you receive amounts from your contract before reaching
age 591/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
- because of your death;
- because you become disabled (as defined in the Code);
- if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or
joint lives or life expectancies of you and your beneficiary); or
- if it is allocable to an investment before Aug. 14, 1982.
WITHHOLDING: If you receive all or part of the contract value, IDS Life may
deduct withholding against the taxable income portion of the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return.
If the payment is part of an annuity payment plan, IDS Life generally computes
the amount of withholding using payroll tables. You may provide IDS Life with a
statement of how many exemptions to use in calculating the withholding. As long
as you've provided IDS Life with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the distribution is any other type of payment (such as a partial or full
surrender) IDS Life computes withholding using 10% of the taxable portion.
Similar to above, as long as you have provided IDS Life with a valid Social
Security Number or Taxpayer Identification Number, you can elect not to have
this withholding occur.
The withholding requirements may differ if IDS Life is making payment to a
non-U.S. citizen or delivering the payment outside the United States.
Some states also may impose withholding requirements similar to the federal
withholding described above. If this should be the case, IDS Life may deduct
state withholding from any payment from which it deducts federal withholding.
TRANSFER OF OWNERSHIP: If you transfer your contract without receiving adequate
consideration, the transfer is a gift and also may be treated as a withdrawal
for federal income tax purposes. If the gift is a currently taxable event for
income tax purposes, the original owner will be taxed on the amount of deferred
earnings at the time of the transfer and also may be subject to the 10% IRS
penalty discussed earlier. In this case, the new owner's investment in the
contract will be the value of the contract at the time of the transfer. In
general, this rule does not apply to transfers between spouses. Please consult
your tax advisor for further details.
COLLATERAL ASSIGNMENT: If you collaterally assign or pledge your contract,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed to you
like a surrender and you may have to pay a 10% IRS penalty.
IMPORTANT: This discussion of federal tax laws is based upon IDS Life's
understanding of current interpretations of these laws. Federal tax laws or
current interpretations of them may change. For this reason and because tax
consequences are complex and highly individual and cannot always be anticipated,
you should consult a tax advisor if you have any questions about taxation of
your contract.
TAX QUALIFICATION: IDS Life intends that the contract qualify as an annuity for
federal income tax purposes. To that end, the provisions of the contract are to
be interpreted to ensure or maintain such tax qualification, in spite of any
other provisions of the contract. IDS Life reserves the right to amend the
contract to reflect any clarifications that may be needed or are appropriate to
maintain such qualification or to conform the contract to any applicable changes
in the tax qualification requirements. IDS Life will send you a copy of any
amendments.
VOTING RIGHTS
The Fund grants and defines voting rights of contract holders under its
regulations. To the extent permitted under the 1940 Act, IDS Life may modify
these voting rights without a vote of a majority of the outstanding voting
units. Variable contract holders can vote on:
- any changes in fundamental investment restrictions;
- the approval of and any changes to the investment management services
agreement; and
- the election of the Board of Managers.
A variable contract holder with accumulation units has a number of votes equal
to the number of accumulation units owned. Under a contract where annuity
payments have started, IDS Life determines the number of votes by dividing the
present value of all future annuity payments by the value of one accumulation
unit on the record date. So, there may be a gradual decline in the number of
votes to which a contract holder is entitled as we continue to make annuity
payments under the contract. The record date will be set by the Board of
Managers not more than 60 days before the regular meeting or any special meeting
of variable contract holders. Cumulative voting is not authorized.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
16
MANAGEMENT
MEMBERS OF THE BOARD OF MANAGERS AND OFFICERS OF THE FUND
You vote at each regular meeting for the Fund's Board of Managers. That board
oversees the Fund's operations. The board appoints officers who are responsible
for day-to-day business decisions based on policies set by the board.
The following is a list of the Fund's board members. Each member oversees Fund A
and Fund B and the seven portfolios of IDS Life Series Fund, Inc. (IDS Life
Series Fund). Board members serve until the next regular meeting or until he or
she reaches the mandatory retirement age established by the board.
INDEPENDENT BOARD MEMBERS
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POSITION HELD WITH FUND PRINCIPAL OCCUPATION
NAME, ADDRESS, AGE AND LENGTH OF SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIPS
----------------------------------------------------------------------------------------------------------------------------
Rodney P. Burwell Board member since 1999 Chairman, Xerxes TCF Financial Joint Audit
Xerxes Corporation Corporation
7901 Xerxes Ave. S. (fiberglass storage
Minneapolis, MN 55431-1253 tanks)
Born in 1939
Jean B. Keffeler Board member since 1999 Retired business Joint Audit
3424 Zenith Ave. S. executive
Minneapolis, MN 55416
Born in 1945
Thomas R. McBurney Board member since 1999 President, McBurney The Valspar Joint Audit
McBurney Management Advisors Management Advisors Corporation
4900 IDS Center, (paints)
80 South Eighth Street
Minneapolis, MN 55402
Born in 1938
BOARD MEMBERS AFFILIATED WITH AMERICAN EXPRESS FINANCIAL CORPORATION (AEFC)*
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POSITION HELD WITH FUND PRINCIPAL OCCUPATION
NAME, ADDRESS, AGE AND LENGTH OF SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIPS
----------------------------------------------------------------------------------------------------------------------------
Gumer C. Alvero Board member since Director and Executive
70100 AXP Financial Center 1998, Chairman of the Vice President -
Minneapolis, MN 55474 Board since 2000 Annuities, IDS Life,
Born in 1967 since 2001. Vice
President - General
Manager Annuities, AEFC,
since 1998
Timothy V. Bechtold Board member since Director and President,
70100 AXP Financial Center 2001, President and IDS Life, since 2001.
Minneapolis, MN 55474 Chief Executive Officer Executive Vice President
Born in 1953 since 2002 - Insurance Products,
IDS Life, from 1995 to
2001. Vice President -
Insurance Products,
AEFC, since 1995
The board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the board. In addition to Mr. Bechtold, who is President and Chief
Executive Officer, the Fund's other officers are:
OTHER OFFICERS
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POSITION HELD WITH FUND PRINCIPAL OCCUPATION
NAME, ADDRESS, AGE AND LENGTH OF SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS
-----------------------------------------------------------------------------------------------------
C. Nikol Davies Secretary since 2001 Assistant Secretary,
70100 AXP Financial Center AEFC, since 2001.
Minneapolis, MN 55474 Paralegal at Boyle & Voss
Born in 1966 and Administrative
Assistant for the
Department of the U.S.
Air Force prior to 2001
Jeffrey P. Fox Chief Financial Officer Vice President -
70100 AXP Financial Center since 2002 Investment Accounting,
Minneapolis, MN 55474 AEFC, since 2002. Vice
Born in 1955 President - Finance,
American Express
Company, 2000-2002. Vice
President - Corporate
Controller, AEFC,
1996-2000
Lorraine R. Hart Vice President - Vice President -
70100 AXP Financial Center Investments since 1992 Insurance Investments,
Minneapolis, MN 55474 AEFC, since 1989
Born in 1951
Judd K. Lohmann Treasurer since 2003 Assistant Treasurer and
70100 AXP Financial Center Director - Finance and
Minneapolis, MN 55474 Analysis, AEFC, since
Born in 1958 2000. Director of
Operations, Advisor
Business Systems, AEFC,
from 1996-2000
- Interested person by reason of being an officer, director and/or employee of
AEFC.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
17
The Joint Audit Committee was established in 2002. The committee will hold
meetings throughout the year with the independent public accountant, internal
auditors and corporate officers to review financial statements, reports and
compliance matters.
RESPONSIBILITIES OF BOARD WITH RESPECT TO FUND'S MANAGEMENT
The Board of Managers initially approves an Investment Management Services
Agreement and any other contracts with AEFC and IDS Life. Once the contracts are
approved, the Board monitors the level and quality of services including
commitments of service providers to achieve expected levels of investment
performance and shareholder services. In addition, the Board oversees that
processses are in place to assure compliance with applicable rules, regulations
and investment policies and addresses possible conflicts of interest. Annually,
the Board evaluates the services received under the contracts and determines
whether to continue existing contracts or negotiate new contracts.
MANAGERS' HOLDINGS
The following table shows the dollar range of equity securities beneficially
owned by each Manager as of the end of the most recently completed calendar
year. The table shows equity ownership in the Fund and, on an aggregate basis,
ownership in the registered investment companies overseen by the Manager which
include the Fund, Fund B and IDS Life Series Fund (the Family of Investment
Companies).
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AGGREGATE DOLLAR
RANGE OF EQUITY
DOLLAR RANGE OF EQUITY SECURITIES IN THE FAMILY OF
NAME OF MANAGER SECURITIES IN THE FUND INVESTMENT COMPANIES
-------------------------------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS
Rodney P. Burwell None None
Jean B. Keffeler None None
Thomas R. McBurney None None
BOARD MEMBERS AFFILIATED WITH AEFC
Gumer C. Alvero None None
Timothy V. Bechtold None $50,001-$100,000
COMPENSATION FOR BOARD MEMBERS
During the most recent fiscal year, the independent Managers of the Fund, for
attending up to four meetings, received the following compensation:
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TOTAL CASH
AGGREGATE COMPENSATION FOR
COMPENSATION THE FUND, FUND B AND
BOARD MEMBER FOR THE FUND IDS LIFE SERIES FUND
--------------------------------------------------------------------------------
Rodney P. Burwell $ 1,750 $ 7,000
Jean B. Keffeler $ 2,000 $ 8,000
Thomas R. McBurney $ 1,750 $ 7,000
The Managers who are not independent members of the Board and all officers of
the Fund are salaried employees of IDS Life or AEFC and do not receive
compensation from the Fund. The members of the Board of Managers and the
officers of the Fund aggregately hold less than 1% of the outstanding voting
units.
CODE OF ETHICS
The Fund and AEFC have adopted codes of ethics that prohibit affiliated
personnel from engaging in personal investment activities that compete with or
attempt to take advantage of planned portfolio transactions for the Fund. You
can review these codes of ethics and copy them at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site. These codes of ethics
are available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov). You also can obtain copies, after paying a duplicating
fee, by electronic request at the following address: publicinfo@sec.gov. or by
writing the SEC's Public Reference Section, Washington D.C. 20549-0102.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
18
OTHER INFORMATION
HISTORY
The Fund is an open-end diversified investment company as defined under the 1940
Act. It was organized as a segregated asset account by IDS Life under Minnesota
law on May 10, 1968.
IDS Life is a stock life insurance company organized under Minnesota law on Aug.
7, 1957. It conducts a conventional life insurance business in addition to its
variable annuity business.
ASSETS OF THE FUND
On Dec. 31, 2002, there were 7,896 outstanding contracts. The assets were
$218,887,416.
The Fund holds these assets solely for the variable contract holders. The assets
are not used to pay liabilities of any other business of IDS Life.
HEADQUARTERS
The home office of IDS Life is located at 70100 AXP Financial Center in
Minneapolis, Minnesota 55474.
OWNERSHIP OF IDS LIFE AND AEFC
All of the capital stock of IDS Life is owned by AEFC. On Jan. 12, 1984,
Investors Diversified Services, Inc., of which IDS Life was a wholly owned
subsidiary, was merged into a wholly owned subsidiary of American Express
Company to form IDS Financial Services Inc. On Jan. 1, 1995, IDS Financial
Corporation's name was changed to American Express Financial Corporation, and
IDS Financial Services Inc.'s name was changed to American Express Financial
Advisors Inc. AEFC serves as investment manager for the Fund. AEFC is an
investment adviser for a number of open-end investment companies and for its
subsidiaries. AEFC's headquarters is 70100 AXP Financial Center, Minneapolis,
Minnesota 55474.
CUSTODIAN
Pursuant to a custodian agreement, the Fund's securities and cash are held by
American Express Trust Company, 200 AXP Financial Center, Minneapolis, MN 55474.
The custodian has entered into a sub-custodian agreement with the Bank of New
York, New York, NY. As part of this arrangement, portfolio securities purchased
outside the United States are maintained in the custody of various foreign
branches of Bank of New York or in other financial institutions as permitted by
law and by the Fund's sub-custodian agreement.
INSURANCE REGULATION
IDS Life is regulated by the Department of Commerce of the State of Minnesota.
From time to time, the department examines the company's liabilities and
reserves and certifies their correctness. IDS Life also is subject to insurance
laws and regulations of other states where it is licensed to do business.
FINANCIAL STATEMENTS
The Report of Independent Auditors and the Financial Statements, including Notes
to Financial Statements and the schedule of investments in securities, contained
in the 2002 Annual Report to IDS Life Variable Annuity Fund A contract holders
are incorporated in this Prospectus by reference. No other portion of the Annual
Report, however, is incorporated by reference.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
19
LEGAL PROCEEDINGS
We are a party to litigation and arbitration proceedings in the ordinary course
of our business, none of which is expected to have a material adverse effect on
us.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, alleging improper life insurance
sales practices, alleged agent misconduct, failure to properly supervise agents
and other matters relating to life insurance policies and annuity contracts. We
and our affiliates were named defendants in three purported class-action
lawsuits alleging improper insurance and annuity sales practices including
improper replacement of existing annuity contracts and insurance policies,
improper use of annuities to fund tax deferred contributory retirement plans,
alleged agent misconduct, failure to properly supervise agents and other matters
relating to life insurance policies and annuity contracts (BENACQUISTO V. IDS
LIFE INSURANCE COMPANY filed in Minnesota State Court 12/13/96; MORK, ET. AL. V.
IDS LIFE INSURANCE COMPANY filed in Minnesota State Court 3/21/97; THORESEN V.
IDS LIFE INSURANCE COMPANY, ET. AL. filed in Minnesota State Court 10/13/98). A
fourth lawsuit was filed against us and our affiliates in federal court
(BENACQUISTO, ET. AL. V. IDS LIFE INSURANCE COMPANY, ET. AL. filed in United
States District Court - Minnesota 8/00). In January 2000, AEFC reached an
agreement in principle to settle the four class action lawsuits described above.
It is expected the settlement will provide $215 million of benefits to more than
two million participants in exchange for a release by class members of all
insurance and annuity state and federal market conduct claims dating back to
1985.
The settlement received court approval. Implementation of the settlement
commenced October 15, 2001 and is substantially complete. Claim review payments
have been made. Numerous individuals opted out of the settlement described above
and therefore did not release their claims against AEFC and its subsidiaries.
Some of these class members who opted out were represented by counsel and
presented separate claims to AEFC and us. Most of their claims have been
settled.
In November 2002, a suit, captioned HARITOS ET. AL. V. AMERICAN EXPRESS
FINANCIAL CORPORATION AND IDS LIFE INSURANCE COMPANY, was filed in the United
States District Court for the District of Arizona. The suit is filed by the
plaintiffs who purport to represent a class of all persons that have purchased
financial plans from AEFA advisors during an undefined class period. Plaintiffs
allege that the sale of the plans violate the Investment Advisers Act of 1940.
The suit seeks an unspecified amount of damages, rescission and injunctive
relief. We believe that we have meritorious defenses to this suit and intend to
defend this case vigorously.
The outcome of any litigation or threatened litigation cannot be predicted with
any certainty. However, in the aggregate, we do not consider any lawsuits in
which we are named as a defendant to have a material impact on our financial
position or operating results.
IDS LIFE VARIABLE ANNUITY FUND A -- PROSPECTUS
20
IDS Life Insurance Company
-------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS
IDS LIFE INSURANCE COMPANY
We have audited the accompanying consolidated balance sheets of IDS Life
Insurance Company (a wholly-owned subsidiary of American Express Financial
Corporation) as of December 31, 2002 and 2001, and the related consolidated
statements of income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of IDS Life Insurance
Company at December 31, 2002 and 2001, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2002, in conformity with accounting principles generally accepted
in the United States.
ERNST & YOUNG LLP
January 27, 2003
Minneapolis, Minnesota
IDS Life Insurance Company
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Consolidated Balance Sheets
December 31, (In thousands, except share amounts) 2002 2001
Assets
Investments:
Available-for-sale:
Fixed maturities, at fair value (amortized cost: 2002, $23,209,226; 2001, $20,022,072) $24,052,104 $20,157,137
Common stocks, at fair value (cost: 2002, $19; 2001, $805) 21 1,704
Mortgage loans on real estate 3,417,651 3,680,394
Policy loans 597,144 619,571
Other investments 752,558 621,897
------- -------
Total investments 28,819,478 25,080,703
Cash and cash equivalents 4,424,061 1,150,251
Amounts recoverable from reinsurers 633,510 529,166
Amounts due from brokers 501 90,794
Other accounts receivable 56,245 46,349
Accrued investment income 296,595 278,199
Deferred policy acquisition costs 3,309,783 3,107,187
Deferred income taxes, net -- 156,308
Other assets 117,788 123,246
Separate account assets 21,980,674 27,333,697
---------- ----------
Total assets $59,638,635 $57,895,900
=========== ===========
Liabilities and stockholder's equity
Liabilities:
Future policy benefits:
Fixed annuities $23,411,314 $19,592,273
Universal life-type insurance 3,515,010 3,433,904
Traditional life insurance 247,441 241,165
Disability income and long-term care insurance 1,466,171 1,227,172
Policy claims and other policyholders' funds 85,400 71,879
Amounts due to brokers 3,342,989 1,740,031
Deferred income taxes, net 182,059 --
Other liabilities 463,326 437,017
Separate account liabilities 21,980,674 27,333,697
---------- ----------
Total liabilities 54,694,384 54,077,138
---------- ----------
Commitments and contingencies
Stockholder's equity:
Capital stock, $30 par value per share; 100,000 shares authorized, issued and outstanding 3,000 3,000
Additional paid-in capital 1,088,327 688,327
Accumulated other comprehensive income, net of tax:
Net unrealized securities gains 497,319 83,443
Net unrealized derivative gains (losses) 764 1,332
--- -----
Total accumulated other comprehensive income 498,083 84,775
Retained earnings 3,354,841 3,042,660
--------- ---------
Total stockholder's equity 4,944,251 3,818,762
--------- ---------
Total liabilities and stockholder's equity $59,638,635 $57,895,900
=========== ===========
See accompanying notes to consolidated financial statements.
IDS Life Insurance Company
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Consolidated Statements of Income
Years ended December 31, (In thousands) 2002 2001 2000
Revenues
Premiums:
Traditional life insurance $ 67,978 $ 59,415 $ 56,187
Disability income and long-term care insurance 273,737 255,428 231,311
------- ------- -------
Total premiums 341,715 314,843 287,498
Net investment income 1,561,856 1,485,688 1,730,605
Policyholder and contractholder charges 522,777 489,583 438,127
Management and other fees 404,787 473,406 598,168
Net realized loss on investments (4,507) (649,752) (16,975)
------ -------- -------
Total revenues 2,826,628 2,113,768 3,037,423
--------- --------- ---------
Benefits and expenses
Death and other benefits:
Traditional life insurance 36,881 35,519 29,042
Universal life-type insurance and investment contracts 221,544 175,247 131,467
Disability income and long-term care insurance 52,962 44,725 40,246
Increase in liabilities for future policy benefits:
Traditional life insurance 2,768 7,231 5,765
Disability income and long-term care insurance 134,605 123,227 113,239
Interest credited on universal life-type insurance and investment contracts 1,157,636 1,137,636 1,169,641
Amortization of deferred policy acquisition costs 312,402 371,342 362,106
Other insurance and operating expenses 437,823 407,798 378,653
------- ------- -------
Total benefits and expenses 2,356,621 2,302,725 2,230,159
--------- --------- ---------
Income (loss) before income tax expense (benefit) and
cumulative effect of accounting change 470,007 (188,957) 807,264
Income tax expense (benefit) 87,826 (145,222) 221,627
------ -------- -------
Income (loss) before cumulative effect of accounting change 382,181 (43,735) 585,637
Cumulative effect of accounting change (net of income tax benefit of $11,532) -- (21,416) --
---------- ---------- ----------
Net income (loss) $ 382,181 $ (65,151) $ 585,637
========== ========== ==========
See accompanying notes to consolidated financial statements.
IDS Life Insurance Company
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Consolidated Statements of Stockholder's Equity
Accumulated
other
Additional comprehensive Total
Capital paid-in income (loss), Retained stockholder's
For the three years ended December 31, 2002 (In thousands) stock capital net of tax earnings equity
Balance, January 1, 2000 $3,000 $ 288,327 $(411,230) $2,932,174 $2,812,271
Comprehensive income:
Net income -- -- -- 585,637 585,637
Net unrealized holding gains on available-for-sale
securities arising during the year, net of deferred
policy acquisition costs of ($5,154)
and income tax expense of ($46,921) -- -- 87,138 -- 87,138
Reclassification adjustment for gains included in
net income, net of income tax expense of $5,192 -- -- (9,642) -- (9,642)
------ ----------- --------- ---------- ----------
Other comprehensive income -- -- 77,496 -- 77,496
------ ----------- --------- ---------- ----------
Comprehensive income -- -- -- -- 663,133
Cash dividends -- -- -- (410,000) (410,000)
------ ----------- --------- ---------- ----------
Balance, December 31, 2000 3,000 288,327 (333,734) 3,107,811 3,065,404
Comprehensive income:
Net loss -- -- -- (65,151) (65,151)
Cumulative effect of adopting SFAS No. 133, net of
income tax benefit of $626 -- -- (1,162) -- (1,162)
Net unrealized holding losses on available-for-sale
securities arising during the year, net of deferred
policy acquisition costs of ($20,191)
and income tax benefit of $6,064 -- -- (11,262) -- (11,262)
Reclassification adjustment for losses on
available-for-sale securities included in net loss,
net of income tax benefit of $228,003 -- -- 423,434 -- 423,434
Reclassification adjustment for losses on derivatives
included in net loss, net of income tax benefit of $4,038 -- -- 7,499 -- 7,499
------ ----------- --------- ---------- ----------
Other comprehensive income -- -- 418,509 -- 418,509
------ ----------- --------- ---------- ----------
Comprehensive income -- -- -- -- 353,358
Capital contribution -- 400,000 -- -- 400,000
------ ----------- --------- ---------- ----------
Balance, December 31, 2001 3,000 688,327 84,775 3,042,660 3,818,762
Comprehensive income:
Net income -- -- -- 382,181 382,181
Net unrealized holding gains on available-for-sale
securities arising during the year, net of deferred
policy acquisition costs of ($75,351)
and income tax expense of ($228,502) -- -- 424,360 -- 424,360
Reclassification adjustment for gains on available-for-sale
securities included in net income, net of income tax
expense of $5,645 -- -- (10,484) -- (10,484)
Reclassification adjustment for gains on derivatives
included in net income, net of income tax expense of $305 -- -- (568) -- (568)
------ ----------- --------- ---------- ----------
Other comprehensive income -- -- 413,308 -- 413,308
------ ----------- --------- ---------- ----------
Comprehensive income -- -- -- -- 795,489
Cash dividends -- -- -- (70,000) (70,000)
Capital contribution -- 400,000 -- -- 400,000
------ ----------- --------- ---------- ----------
Balance, December 31, 2002 $3,000 $1,088,327 $ 498,083 $3,354,841 $4,944,251
====== ========== ========= ========== ==========
See accompanying notes to consolidated financial statements.
IDS Life Insurance Company
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Consolidated Statements of Cash Flows
Years ended December 31, (In thousands) 2002 2001 2000
Cash flows from operating activities
Net income (loss) $ 382,181 $ (65,151) $ 585,637
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Cumulative effect of accounting change, net of tax -- 21,416 --
Policy loans, excluding universal life-type insurance:
Issuance (35,345) (43,687) (61,313)
Repayment 49,256 54,004 56,088
Change in amounts recoverable from reinsurers (104,344) (112,686) (89,312)
Change in other accounts receivable (9,896) (4,025) 6,254
Change in accrued investment income (5,139) 56,729 8,521
Change in deferred policy acquisition costs, net (277,947) (175,723) (291,634)
Change in liabilities for future policy benefits for traditional life,
disability income and long-term care insurance 245,275 223,177 206,377
Change in policy claims and other policyholder's funds 13,521 19,812 27,467
Deferred income tax provision (benefit) 116,995 (246,205) 37,704
Change in other liabilities 26,309 (24,509) (120,256)
Amortization of premium, net 65,869 108,958 37,909
Net realized loss on investments 4,507 649,752 16,975
Policyholder and contractholder charges, non-cash (232,725) (217,496) (151,745)
Other, net 13,820 (83,023) (9,279)
------- ------- -------
Net cash provided by operating activities 252,337 161,343 259,393
------- ------- -------
Cash flows from investing activities
Held-to-maturity securities:
Purchases -- -- (4,487)
Maturities, sinking fund payments and calls -- -- 589,742
Sales -- -- 50,067
Available-for-sale securities:
Purchases (16,287,891) (9,477,740) (1,454,010)
Maturities, sinking fund payments and calls 3,078,509 2,706,147 1,019,403
Sales 10,093,228 5,493,141 1,237,116
Other investments, excluding policy loans:
Purchases (543,843) (442,876) (706,082)
Sales 509,588 370,636 435,633
Change in amounts due from brokers 90,293 (75,492) (15,157)
Change in amounts due to brokers 1,602,958 1,293,684 298,236
--------- --------- -------
Net cash (used in) provided by investing activities (1,457,158) (132,500) 1,450,461
---------- -------- ---------
Cash flows from financing activities
Activities related to universal life-type insurance and investment contracts:
Considerations received 4,638,111 2,088,114 1,842,026
Surrenders and other benefits (1,655,631) (2,810,401) (3,974,966)
Interest credited to account balances 1,157,636 1,137,636 1,169,641
Universal life-type insurance policy loans:
Issuance (80,831) (83,720) (134,107)
Repayment 89,346 72,805 82,193
Capital contribution 400,000 400,000 --
Dividends paid (70,000) -- (410,000)
--------- ------- ----------
Net cash provided by (used in) financing activities 4,478,631 804,434 (1,425,213)
--------- ------- ----------
Net increase in cash and cash equivalents 3,273,810 833,277 284,641
Cash and cash equivalents at beginning of year 1,150,251 316,974 32,333
--------- ------- ----------
Cash and cash equivalents at end of year $ 4,424,061 $ 1,150,251 $ 316,974
============ =========== ===========
Supplemental disclosures:
Income taxes paid $ -- $ -- $ 225,704
Interest on borrowings 7,906 23,688 3,299
--------- ------- ----------
See accompanying notes to consolidated financial statements.
IDS Life Insurance Company
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Notes to Consolidated Financial Statements
(In thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of business
IDS Life Insurance Company (the Company) is a stock life insurance company
organized under the laws of the State of Minnesota whose products are primarily
distributed through branded financial advisors. The Company is a wholly-owned
subsidiary of American Express Financial Corporation (AEFC), which is a
wholly-owned subsidiary of American Express Company. The Company serves
residents of all states except New York. IDS Life Insurance Company of New York
is a wholly-owned subsidiary of the Company and serves New York State residents.
The Company also wholly-owns American Enterprise Life Insurance Company, which
issues fixed and variable annuity contracts for sale through insurance agencies
and broker-dealers who may also be associated with financial institutions, such
as banks. American Centurion Life Assurance Company is a wholly-owned subsidiary
that offers fixed and variable annuities to American Express(R) Cardmembers and
others in New York and through insurance agencies and broker-dealers who may
also be associated with financial institutions, such as banks, in New York.
American Partners Life Insurance Company is a wholly-owned subsidiary that
offers fixed and variable annuities to American Express(R) Cardmembers and
others who reside in states other than New York. The Company also wholly-owns
IDS REO 1, LLC and American Express Corporation. These subsidiaries hold real
estate, mortgage loans on real estate and/or affordable housing investments.
The Company's principal products are deferred annuities and universal life
insurance which are issued primarily to individuals. It offers single premium
and flexible premium deferred annuities on both a fixed and variable dollar
basis. Immediate annuities are offered as well. The Company's fixed deferred
annuities guarantee a relatively low annual interest rate during the
accumulation period (the time before annuity payments begin). However, the
Company has the option of paying a higher rate set at its discretion. In
addition, persons owning one type of annuity may have their interest calculated
based on any increase in a broad-based stock market index. The Company also
offers variable annuities, including the American Express Retirement Advisor
Advantage(R) Variable Annuity and the American Express Retirement Advisor
Select(R) Variable Annuity. Life insurance products currently offered by the
Company include universal life (fixed and variable, single life and joint life),
single premium life and term products. Waiver of premium and accidental death
benefit riders are generally available with these life insurance products. The
Company also markets disability income insurance. Although the Company
discontinued marketing proprietary long-term care insurance at the end of 2002,
long-term care insurance is available through a non-proprietary product
distributed by an affiliate.
Under the Company's variable life insurance and variable annuity products
described above, the purchaser may choose among investment options that include
the Company's "general account" as well as from a variety of portfolios
including common stocks, bonds, managed assets and/or short- term securities.
Basis of presentation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States
which vary in certain respects from reporting practices prescribed or permitted
by state insurance regulatory authorities (see Note 4). Certain prior year
amounts have been reclassified to conform to the current year's presentation.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue recognition
Profits on fixed deferred annuities are the excess of contractholder charges and
investment income earned from investment of contract considerations over
interest credited to contract values, amortization of deferred acquisition
costs, and other expenses. Profits on variable deferred annuities also include
the excess of management and other fees over the costs of guaranteed benefits
provided. Policyholder and contractholder charges include policy fees and
surrender charges. Management and other fees include investment management fees
from underlying proprietary mutual funds, certain fee revenues from underlying
nonproprietary mutual funds and mortality and expense risk fees from the
variable annuity separate accounts.
IDS Life Insurance Company
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Profits on fixed universal life insurance are the excess of contractholder
charges and investment income earned from investment of contract considerations
over interest credited to contract values, death and other benefits paid in
excess of contract values, amortization of deferred acquisition costs, and other
expenses. Profits on variable universal life insurance also include management
and other fees. Policyholder and contractholder charges include the monthly cost
of insurance charges, issue and administrative fees and surrender charges. These
charges also include the minimum death benefit guarantee fees received from the
variable life insurance separate accounts. Management and other fees include
investment management fees from underlying proprietary mutual funds, certain fee
revenues from underlying nonproprietary mutual funds and mortality and expense
risk fees from the variable life insurance separate accounts.
Premiums on traditional life, disability income and long-term care insurance
policies are recognized as revenue when due, and related benefits and expenses
are associated with premium revenue in a manner that results in recognition of
profits over the lives of the insurance policies. This association is
accomplished by means of the provision for future policy benefits and the
deferral and subsequent amortization of policy acquisition costs.
Investments -- Fixed maturity and equity securities
All fixed maturity securities and marketable equity securities are classified as
available-for-sale and carried at fair value. Unrealized gains and losses on
securities classified as available-for-sale are carried as a separate component
of accumulated other comprehensive income (loss), net of the related deferred
policy acquisition costs and income taxes. Gains and losses are recognized in
the results of operations upon disposition of the securities using the specific
identification method. In addition, losses are also recognized when management
determines that a decline in a security's fair value is other-than-temporary,
which requires judgment regarding the amount and timing of recovery. Indicators
of other-than-temporary impairment for fixed maturity securities include, but
are not limited to, issuer downgrade, default, or bankruptcy. The Company also
considers the extent to which cost exceeds fair value, the duration of time of
that decline, and management's judgment about the issuer's current and
prospective financial condition. The charges are reflected in net realized loss
on investments within the Consolidated Statements of Income.
Fair value of fixed maturity and equity securities is generally based on quoted
market prices. However, the Company's investment portfolio also contains
structured investments of various asset quality, including collateralized debt
obligations (CDOs) and secured loan trusts (backed by high-yield bonds and bank
loans), which are not readily marketable. As a result, the carrying values of
these structured investments are based on estimated cash flow projections which
require a significant degree of management judgment as to default and recovery
rates of the underlying investments and, as such, are subject to change. The
Company's CDO investments are accounted for in accordance with Emerging Issues
Task Force (EITF) Issue 99-20 "Recognition of Interest Income and Impairment on
Purchased and Retained Beneficial Interests in Securitized Financial Assets."
The Company's secured loan trusts are accounted for in accordance with EITF
Issue 96-12 "Recognition of Interest Income and Balance Sheet Classification of
Structured Notes."
Net investment income, which primarily consists of interest earned on fixed
maturity securities, is generally accrued as earned using the effective interest
method, which makes an adjustment of the yield for security premiums, discounts
and anticipated prepayments on mortgage-backed securities. Prepayment estimates
are based on information received from brokers who deal in mortgage-backed
securities.
Investments -- Mortgage loans on real estate
Mortgage loans on real estate reflect principal amounts outstanding less
reserves for losses. The estimated fair value of the mortgage loans is
determined by discounted cash flow analyses using mortgage interest rates
currently offered for mortgages of similar maturities.
The reserve for losses is measured as the excess of the loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate or the fair value of
collateral. Additionally, the level of the reserve for losses considers other
factors, including historical experience and current economic and political
conditions. Management regularly evaluates the adequacy of the reserve for
mortgage loan losses and believes it is adequate to absorb estimated losses in
the portfolio.
The Company generally stops accruing interest on mortgage loans for which
interest payments are delinquent more than three months. Based on management's
judgment as to the ultimate collectibility of principal, interest payments
received are either recognized as income or applied to the recorded investment
in the loan.
Investments -- Policy loans
Policy loans are carried at the aggregate of the unpaid loan balances, which do
not exceed the cash surrender values of the related policies.
IDS Life Insurance Company
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Investments -- Other investments
Included in Other investments are affordable housing investments, trading
securities, syndicated loans and real estate. Affordable housing investments are
carried at amortized cost as the Company has no influence over the operating or
financial policies of the general partner. Trading securities are held at fair
market value with changes in value recognized in the Consolidated Statements of
Income within Net investment income. Syndicated loans reflect principal amounts
outstanding less reserves for losses and real estate is carried at its estimated
fair value.
Cash and cash equivalents
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These securities are
carried principally at amortized cost, which approximates fair value.
Deferred policy acquisition costs
The costs of acquiring new business, including for example, direct sales
commissions, related sales incentive bonuses and awards, underwriting costs,
policy issue costs and other related costs, have been deferred on the sale of
insurance and annuity contracts. The deferred acquisition costs (DAC) for
universal life and variable universal life insurance and certain installment
annuities are amortized as a percentage of the estimated gross profits expected
to be realized on the policies. DAC for other annuities are amortized using the
interest method. For traditional life, disability income and long-term care
insurance policies, the costs are amortized in proportion to premium revenue.
Amortization of DAC requires the use of certain assumptions including interest
margins, mortality rates, persistency rates, maintenance expense levels and
customer asset value growth rates for variable products. The customer asset
value growth rate is the rate at which contract values are assumed to appreciate
in the future. This rate is net of asset fees, and anticipates a blend of equity
and fixed income investments. Management routinely monitors a wide variety of
trends in the business, including comparisons of actual and assumed experience.
Management reviews and, where appropriate, adjusts its assumptions with respect
to customer asset value growth rates on a quarterly basis.
Management monitors other principal DAC assumptions, such as persistency rates,
mortality rate, interest margin and maintenance expense level assumptions each
quarter. Unless management identifies a material deviation over the course of
the quarterly monitoring, management reviews and updates these DAC assumptions
annually in the third quarter of each year.
When assumptions are changed, the percentage of estimated gross profits or
portion of interest margins used to amortize DAC may also change. A change in
the required amortization percentage is applied retrospectively; an increase in
amortization percentage will result in an acceleration of DAC amortization while
a decrease in amortization percentage will result in a deceleration of DAC
amortization. The impact on results of operations of changing assumptions with
respect to the amortization of DAC can be either positive or negative in any
particular period, and is reflected in the period that such changes are made.
These adjustments are collectively referred to as unlocking adjustments.
Unlocking adjustments resulted in net increases in amortization of $40,000 in
2002 and $33,600 in 2001, with a net decrease in amortization of $12,300 in
2000.
Guaranteed minimum death benefits
The majority of the variable annuity contracts offered by the Company contain
guaranteed minimum death benefit (GMDB) provisions. At time of issue, these
contracts typically guarantee that the death benefit payable will not be less
than the amount invested, regardless of the performance of the customer's
account. Most contracts also provide for some type of periodic adjustment of the
guaranteed amount based on the change in value of the contract. A large portion
of the Company's contracts containing a GMDB provision adjust once every six
years. The periodic adjustment of these contracts can either increase or
decrease the guaranteed amount, though not below the amount invested, adjusted
for withdrawals. When market values of the customer's accounts decline, the
death benefit payable on a contract with a GMDB may exceed the accumulated
contract value. Currently, the amount paid in excess of contract value is
expensed when payable. Amounts expensed in 2002, 2001 and 2000 were $37,361,
$16,202 and $835, respectively.
Liabilities for future policy benefits
Liabilities for fixed and variable universal life insurance and fixed and
variable deferred annuities are accumulation values.
Liabilities for equity indexed deferred annuities issued before 1999 are equal
to the present value of guaranteed benefits and the intrinsic value of
index-based benefits. Liabilities for equity indexed deferred annuities issued
in 1999 or later are equal to the accumulation of host contract values covering
guaranteed benefits and the market value of embedded equity options.
Liabilities for fixed annuities in a benefit status are based on established
industry mortality tables and interest rates ranging from 5% to 9.5%, depending
on year of issue, with an average rate of approximately 6.5%.
IDS Life Insurance Company
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Liabilities for future benefits on traditional life insurance, principally term
and whole life insurance, are based on the net level premium method, using
anticipated mortality, policy persistency and interest earning rates.
Anticipated mortality rates are based on established industry mortality tables,
with modifications based on Company experience. Anticipated policy persistency
rates vary by policy form, issue age and policy duration with persistency on
level term and cash value plans generally anticipated to be better than
persistency on yearly renewable term insurance plans. Anticipated interest rates
range from 4% to 10%, depending on policy form, issue year and policy duration.
Liabilities for future disability income and long-term care policy benefits
include both policy reserves and claim reserves. Policy reserves are based on
the net level premium method, using anticipated morbidity, mortality, policy
persistency and interest earning rates. Anticipated morbidity and mortality
rates are based on established industry morbidity and mortality tables.
Anticipated policy persistency rates vary by policy form, issue age, policy
duration and, for disability income policies, occupation class. Anticipated
interest rates for disability income and long-term care policy reserves are 3%
to 9.5% at policy issue and grade to ultimate rates of 5% to 7% over 5 to 10
years.
Claim reserves are calculated based on claim continuance tables and anticipated
interest earnings. Anticipated claim continuance rates are based on established
industry tables. Anticipated interest rates for claim reserves for both
disability income and long-term care range from 5% to 8%.
Liabilities for reported and unpaid life insurance claims are equal to the death
benefits payable. For disability income and long-term care claims, unpaid claims
liabilities are equal to benefit amounts due and accrued. Liabilities for
incurred but not reported claims are estimated based on periodic analysis of the
actual reported claim lag. Where applicable, amounts recoverable from reinsurers
are separately recorded as receivables. For life insurance, no claim adjustment
expense reserve is held. The claim adjustment expense reserves for disability
income and long-term care are based on the claim reserves.
The Company does not issue participating insurance contracts and has no
short-duration life insurance liabilities.
Reinsurance
Reinsurance premiums and benefits paid or provided are accounted for on a basis
consistent with that used in accounting for original policies issued and with
the terms of the reinsurance contracts.
The maximum amount of life insurance risk retained by the Company is $750 on any
policy insuring a single life and $1,500 on any policy insuring a joint-life
combination. The Company generally retains 10% of the mortality risk on new life
insurance policies. Risk not retained is reinsured with other life insurance
companies. Risk on universal life and variable universal life policies is
reinsured on a yearly renewable term basis. Risk on term insurance and long-term
care policies is reinsured on a coinsurance basis. The Company retains all
accidental death benefit, disability income and waiver of premium risk.
Federal income taxes
The Company's taxable income is included in the consolidated federal income tax
return of American Express Company. The Company provides for income taxes on a
separate return basis, except that, under an agreement between AEFC and American
Express Company, tax benefit is recognized for losses to the extent they can be
used on the consolidated tax return. It is the policy of AEFC and its
subsidiaries that AEFC will reimburse subsidiaries for all tax benefits.
Separate account business
The separate account assets and liabilities represent funds held for the
exclusive benefit of the variable annuity and variable life insurance contract
owners. The Company receives investment management fees from the proprietary
mutual funds used as investment options for variable annuities and variable life
insurance. The Company receives mortality and expense risk fees from the
separate accounts.
The Company makes contractual mortality assurances to the variable annuity
contract owners that the net assets of the separate accounts will not be
affected by future variations in the actual life expectancy experience of the
annuitants and beneficiaries from the mortality assumptions implicit in the
annuity contracts. The Company makes periodic fund transfers to, or withdrawals
from, the separate account assets for such actuarial adjustments for variable
annuities that are in the benefit payment period. The Company also guarantees
that the rates at which administrative fees are deducted from contract funds
will not exceed contractual maximums.
For variable life insurance, the Company guarantees that the rates at which
insurance charges and administrative fees are deducted from contract funds will
not exceed contractual maximums. The Company also guarantees that the death
benefit will continue to be payable at the initial level regardless of
investment performance so long as minimum premium payments are made.
IDS Life Insurance Company
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Accounting developments
In July 2000, the Financial Accounting Standards Board's (FASB's) Emerging
Issues Task Force (EITF) issued a consensus on Issue 99-20, "Recognition of
Interest Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets." The Company adopted the consensus as of January
1, 2001. Issue 99-20 prescribes procedures for recording interest income and
measuring impairment on retained and purchased beneficial interests. The
consensus primarily affects the Company's CDO investments. Adoption of the
consensus required the Company to adjust the carrying amount of these
investments downward by $21,416, net of tax, which is reflected as a cumulative
effect of accounting change in the Consolidated Statement of Income.
Effective January 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended (SFAS No. 133), which requires an entity to recognize
all derivatives as either assets or liabilities on the balance sheet and measure
those instruments at fair value. Changes in the fair value of a derivative are
recorded in earnings or directly to other comprehensive income, depending on the
instrument's designated use. The adoption of SFAS No. 133 resulted in a
cumulative after-tax reduction to other comprehensive income of $1,162. The
cumulative impact to earnings was not significant. See Note 8 for further
discussion of the Company's derivative and hedging activities.
SFAS No. 133 also provided a one-time opportunity to reclassify held-to-maturity
security investments to available-for-sale without tainting the remaining
securities in the held-to-maturity portfolio. The Company elected to take the
opportunity in 2001 to reclass all its held-to-maturity investments to
available-for-sale.
The Company adopted SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," which superseded SFAS No.
125. The Statement was effective for transfers and servicing of financial assets
and extinguishments of liabilities occurring after March 31, 2001. The Statement
was effective for recognition and reclassification of collateral and for
disclosures relating to securitization transactions and collateral for fiscal
years ending after December 15, 2000. The impact on the Company's financial
position or results of operations of adopting the Statement was not significant.
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" (FIN 46), which addresses consolidation by business
enterprises of variable interest entities (VIEs). The accounting provisions and
expanded disclosure requirements for VIEs existing at December 31, 2002, are
fully effective for reporting periods beginning after June 15, 2003. An entity
shall be subject to consolidation according to the provisions of FIN 46, if, by
design, either (i) the total equity investment at risk is not sufficient to
permit the entity to finance its activities without additional subordinated
financial support from other parties, or (ii) as a group, the holders of the
equity investment at risk lack: (a) direct or indirect ability to make decisions
about an entity's activities; (b) the obligation to absorb the expected losses
of the entity if they occur; or (c) the right to receive the expected residual
return of the entity if they occur. In general, FIN 46 will require a VIE to be
consolidated when an enterprise has a variable interest that will absorb a
majority of the VIE's expected losses or receive a majority of the VIE's
expected residual return.
It is likely that the Company will consolidate or disclose information about
VIEs when FIN 46 becomes effective in the third quarter of 2003. The entities
primarily impacted by FIN 46 relate to structured investments, including CDOs
and secured loan trusts (SLTs), which are owned by the Company. The application
of FIN 46 for CDOs and SLTs will have no effect on the cash flows of the
Company. The CDO entities contain debt issued to investors, which are
non-recourse to the Company and are solely supported by portfolios of high-yield
bonds and loans. The Company often invests in the residual and rated debt
tranches of the CDO structures that are either managed by a related party or a
third-party. With regards to those CDOs in which the Company owns a residual
tranche and which a related party manages, the portfolios of high-yield bonds
and loans have a fair value at December 31, 2002 of approximately $2.0 billion
for the benefit of the $2.7 billion in CDO debt investors.
Substantially all of the Company's interest in the rated debt tranches along
with rated tranches owned by AEFC were placed in a securitization trust
described in Note 2. The SLTs provide returns to investors primarily based on
the performance of an underlying portfolio of up to $3.3 billion in high-yield
loans. Currently, the underlying portfolio consists of $2.9 billion in
high-yield loans with a market value of $2.6 billion, which are managed by a
related party.
While the potential consolidation of these entities may impact the results of
operations at adoption and for each reporting period thereafter, the Company's
maximum exposure to economic loss as a result of its investment in these
entities is represented by the carrying values at December 31, 2002 because any
further reduction in the value of the assets will be absorbed by the
non-recourse debt or other unrelated entities. The CDO residual tranches have an
adjusted cost basis of $13,363 and the SLTs have an adjusted cost basis of
$656,565.
The Company continues to evaluate other relationships and interests in entities
that may be considered VIEs, including affordable housing investments. The
impact of adopting FIN 46 on the Consolidated Financial Statements is still
being reviewed.
IDS Life Insurance Company
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2. INVESTMENTS
Fixed maturity and equity securities
[Enlarge/Download Table]
The following is a summary of securities available-for-sale at December 31,
2002:
Gross Gross
Amortized unrealized unrealized Fair
cost gains losses value
Fixed maturities:
U.S. Government agency obligations $ 84,075 $ 12,015 $ 687 $ 95,403
State and municipal obligations 29,202 2,522 -- 31,724
Corporate bonds and obligations 9,614,296 611,060 116,345 10,109,011
Mortgage and other asset-backed securities 12,145,797 393,342 10,067 12,529,072
Structured investments 1,306,245 2,112 59,101 1,249,256
Foreign government bonds and obligations 29,611 8,027 -- 37,638
----------- ---------- -------- -----------
Total fixed maturity securities $23,209,226 $1,029,078 $186,200 $24,052,104
=========== ========== ======== ===========
Common stocks $ 19 $ 2 $ -- $ 21
=========== ========== ======== ===========
The amortized cost and fair value of fixed maturity securities at December 31,
2002 by contractual maturity are as follows:
Amortized Fair
cost value
Due within one year $ 768,066 $ 779,833
Due from one to five years 2,740,513 2,887,899
Due from five to ten years 5,865,084 6,165,165
Due in more than ten years 1,689,766 1,690,135
Mortgage and other asset-backed securities 12,145,797 12,529,072
---------- ----------
Total $23,209,226 $24,052,104
=========== ===========
The timing of actual receipts may differ from contractual maturities because
issuers may have the right to call or prepay obligations.
[Enlarge/Download Table]
The following is a summary of securities available-for-sale at December 31,
2001:
Gross Gross
Amortized unrealized unrealized Fair
cost gains losses value
Fixed maturities:
U.S. Government agency obligations $ 31,074 $ 2,190 $ 56 $ 33,208
State and municipal obligations 7,826 149 -- 7,975
Corporate bonds and obligations 10,281,693 272,539 113,061 10,441,171
Mortgage and other asset-backed securities 8,292,576 103,109 32,801 8,362,884
Structured investments 1,377,195 3,793 105,304 1,275,684
Foreign government bonds and obligations 31,708 4,507 -- 36,215
----------- -------- -------- -----------
Total fixed maturity securities $20,022,072 $386,287 $251,222 $20,157,137
----------- -------- -------- -----------
Common stocks $ 805 $ 899 $ -- $ 1,704
=========== ======== ========= ===========
Pursuant to the adoption of SFAS No. 133 the Company reclassified all
held-to-maturity securities with a carrying value of $6,463,613 and net
unrealized gains of $8,185 to available-for-sale as of January 1, 2001.
At December 31, 2002 and 2001, bonds carried at $14,523 and $14,639,
respectively, were on deposit with various states as required by law.
IDS Life Insurance Company
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At December 31, 2002, fixed maturity securities comprised approximately 84
percent of the Company's total investments. These securities are rated by
Moody's and Standard & Poor's (S&P), except for approximately $1.4 billion of
securities which are rated by AEFC's internal analysts using criteria similar to
Moody's and S&P. Ratings are presented using S&P's convention and if the two
agencies' ratings differ, the lower rating is used. A summary of fixed maturity
securities, at fair value, by rating on December 31, is as follows:
Rating 2002 2001
AAA 53% 45%
AA 1 1
A 14 15
BBB 25 34
Below investment grade 7 5
--- ---
Total 100% 100%
=== ===
At December 31, 2002, approximately 93% of the securities rated AAA are GNMA,
FNMA and FHLMC mortgage-backed securities. No holdings of any other issuer were
greater than ten percent of stockholder's equity.
Available-for-sale securities were sold during 2002 with proceeds of $10,093,228
and gross realized gains and losses of $297,477 and $135,824, respectively.
Available-for-sale securities were sold during 2001 with proceeds of $5,493,141
and gross realized gains and losses of $116,565 and $390,732, respectively.
Available-for-sale securities were sold during 2000 with proceeds of $1,237,116
and gross realized gains and losses of $25,101 and $21,147, respectively.
During the years ended December 31, 2002, 2001, and 2000, the Company also
recognized losses of $145,524, $348,730, and $38,816 respectively due to
other-than-temporary impairments on structured investments and corporate debt
securities. These amounts are reflected in the net realized loss on investments
in the Consolidated Statements of Income. The 2001 realized losses and
other-than temporary impairments include the effect of the write-downs and sale
of high-yield securities discussed below.
The net unrealized gain on available-for-sale securities as of December 31, 2002
and 2001, was $842,880 and $135,964, respectively, with the $706,916 change, net
of taxes and deferred policy acquisition costs, reflected as a separate
component in accumulated other comprehensive income for the year ended December
31, 2002. For the years ended December 31, 2001 and 2000 the change in net
unrealized losses on available-for-sale securities was a decrease of $667,340
and $122,196, respectively.
During 2001, the Company recorded pretax losses of $828,175 to recognize the
impact of higher default rate assumptions on certain structured investments; to
write down lower rated securities (most of which were sold during 2001) in
connection with Company's decision to lower its risk profile by reducing the
level of its high-yield portfolio, allocating holdings toward stronger credits,
and reducing the concentration of exposure to individual companies and industry
sectors; to write down certain other investments; and, to adopt EITF Issue
99-20, as previously discussed. Within the Consolidated Statements of Income,
$623,958 of these losses are included in Net realized losses on investments and
$171,269 are included in Net investment income, with the remaining losses
recorded as a cumulative effect of accounting change.
During 2001, the Company placed a majority of its rated CDO securities and
related accrued interest, (collectively referred to as transferred assets),
having an aggregate book value of $675,347, into a securitization trust. In
return, the Company received $89,535 in cash relating to sales to unaffiliated
investors and retained interests with allocated book amounts aggregating
$585,812. As of December 31, 2002, the retained interests had a carrying value
of approximately $562,000, of which approximately $388,000 is considered
investment grade. The book amount is determined by allocating the previous
carrying value of the transferred assets between assets sold and the retained
interests based on their relative fair values. Fair values are based on the
estimated present value of future cash flows. The retained interests are
accounted for in accordance with EITF Issue 99-20.
Fair values of fixed maturity and equity securities represent quoted market
prices and estimated values when quoted prices are not available. Estimated
values are determined by established procedures involving, among other things,
review of market indices, price levels of current offerings of comparable
issues, price estimates, estimated future cash flows and market data from
independent brokers.
IDS Life Insurance Company
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Mortgage loans on real estate
At December 31, 2002, approximately 12% of the Company's investments were
mortgage loans on real estate. Concentration of credit risk by region of the
United States and by type of real estate are as follows:
[Download Table]
December 31, 2002 December 31, 2001
On balance Funding On balance Funding
Region sheet commitments sheet commitments
East North Central $ 611,886 $ -- $ 670,387 $ 1,873
West North Central 493,310 25,500 549,015 --
South Atlantic 765,443 2,800 815,837 9,490
Middle Atlantic 318,699 19,100 352,821 9,363
New England 227,150 5,800 274,486 8,700
Pacific 355,622 5,250 355,945 14,618
West South Central 210,435 1,000 214,000 600
East South Central 63,859 -- 55,798 --
Mountain 406,459 -- 413,053 27
---------- ------- ---------- -------
3,452,863 59,450 3,701,342 44,671
Less reserves for losses 35,212 -- 20,948 --
---------- ------- ---------- -------
Total $3,417,651 $59,450 $3,680,394 $44,671
========== ======= ========== =======
December 31, 2002 December 31, 2001
On balance Funding On balance Funding
Property type sheet commitments sheet commitments
Department/retail stores $ 991,984 $20,722 $1,117,195 $13,200
Apartments 622,185 -- 694,214 11,531
Office buildings 1,178,434 25,628 1,203,090 7,650
Industrial buildings 344,604 13,100 333,713 2,263
Hotels/motels 102,184 -- 108,019 --
Medical buildings 95,189 -- 106,927 6,000
Nursing/retirement homes 35,873 -- 39,590 --
Mixed use 54,512 -- 86,972 27
Other 27,898 -- 11,622 4,000
---------- ------- ---------- -------
3,452,863 59,450 3,701,342 44,671
Less reserves for losses 35,212 -- 20,948 --
---------- ------- ---------- -------
Total $3,417,651 $59,450 $3,680,394 $44,671
========== ======= ========== =======
Mortgage loan fundings are restricted by state insurance regulatory authorities
to 80 percent or less of the market value of the real estate at the time of
origination of the loan. The Company holds the mortgage document, which gives it
the right to take possession of the property if the borrower fails to perform
according to the terms of the agreement. Commitments to fund mortgages are made
in the ordinary course of business. The fair value of the mortgage commitments
is $nil.
At December 31, 2002, 2001 and 2000, the Company's investment in impaired loans
was $33,130, $39,601 and $24,999, respectively, with related reserves of $9,100,
$7,225 and $4,350, respectively.
During 2002, 2001 and 2000, the average recorded investment in impaired loans
was $36,583, $24,498 and $27,063, respectively.
The Company recognized $1,090, $1,285 and $1,033 of interest income related to
impaired loans for the years ended December 31, 2002, 2001 and 2000,
respectively.
IDS Life Insurance Company
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The following table presents changes in the reserves for mortgage loan losses:
2002 2001 2000
Balance, January 1 $20,948 $11,489 $ 28,283
Provision for mortgage loan losses 14,264 14,959 (14,894)
Loan payoffs -- -- (1,200)
Foreclosures and write-offs -- (5,500) (700)
------- ------- --------
Balance, December 31 $35,212 $20,948 $ 11,489
======= ======= ========
Sources of investment income and realized losses on investments
Net investment income for the years ended December 31 is summarized as follows:
2002 2001 2000
Income on fixed maturities $1,331,547 $1,276,966 $1,473,560
Income on mortgage loans 274,524 290,608 286,611
Other (15,642) (41,927) 9,834
---------- ---------- ----------
1,590,429 1,525,647 1,770,005
Less investment expenses 28,573 39,959 39,400
---------- ---------- ----------
Total $1,561,856 $1,485,688 $1,730,605
========== ========== ==========
Net realized losses on investments for the years ended December 31 is summarized
as follows:
2002 2001 2000
Fixed maturities $ 16,129 $(622,897) $(34,862)
Mortgage loans (15,586) (17,834) 16,794
Other investments (5,050) (9,321) 1,093
-------- --------- --------
Total $ (4,507) $(649,752) $(16,975)
======== ========= ========
3. INCOME TAXES
The Company qualifies as a life insurance company for federal income tax
purposes. As such, the Company is subject to the Internal Revenue Code
provisions applicable to life insurance companies.
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The income tax expense (benefit) for the years ended December 31 consists of the
following:
2002 2001 2000
Federal income taxes
Current $(30,648) $ 88,121 $176,397
Deferred 116,996 (234,673) 37,704
-------- --------- --------
86,348 (146,552) 214,101
State income taxes -- current 1,478 1,330 7,526
-------- --------- --------
Income tax expense (benefit) before cumulative effect of accounting change 87,826 (145,222) 221,627
Cumulative effect of accounting change income tax benefit -- (11,532) --
-------- --------- --------
Income tax expense (benefit) $ 87,826 $(156,754) $221,627
======== ========= ========
Income tax expense (benefit) before the cumulative effect of accounting change
differs from that computed by using the federal statutory rate of 35%. The
principal causes of the difference in each year are shown below:
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2002 2001 2000
Provision Rate Provision Rate Provision Rate
Federal income taxes based on the statutory rate $164,502 35.0% $ (66,136) (35.0)% $282,542 35.0%
Tax-exempt interest and dividend income (5,260) (1.1) (4,663) (2.5) (3,788) (0.5)
State taxes, net of federal benefit 961 0.2 865 0.4 4,892 0.6
Affordable housing credits (70,000) (14.9) (73,200) (38.7) (54,569) (6.8)
Other, net (2,377) (0.5) (2,088) (1.1) (7,450) (0.8)
-------- ---- --------- ----- -------- ----
Total income taxes $ 87,826 18.7% $(145,222) (76.9)% $221,627 27.5%
======== ==== ========= ===== ======== ====
A portion of life insurance company income earned prior to 1984 was not subject
to current taxation but was accumulated, for tax purposes, in a "policyholders'
surplus account." At December 31, 2002, the Company had a policyholders' surplus
account balance of $20,114. The policyholders' surplus account is only taxable
if dividends to the stockholder exceed the stockholder's surplus account or if
the Company is liquidated. Deferred income taxes of $7,040 have not been
established because no distributions of such amounts are contemplated.
IDS Life Insurance Company
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Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred income tax assets and liabilities as of December 31 are
as follows:
2002 2001
Deferred income tax assets:
Policy reserves $ 683,144 $ 705,637
Other investments 319,829 333,857
Other 29,789 24,640
--------- ---------
Total deferred income tax assets 1,032,762 1,064,134
--------- ---------
Deferred income tax liabilities:
Deferred policy acquisition costs 929,751 861,892
Net unrealized gain -- available-for-sale securities 267,787 45,934
Other 17,283 --
--------- ---------
Total deferred income tax liabilities 1,214,821 907,826
--------- ---------
Net deferred income tax (liability) asset $ (182,059) $ 156,308
========== ==========
The Company is required to establish a valuation allowance for any portion of
the deferred income tax assets that management believes will not be realized. In
the opinion of management, it is more likely than not that the Company will
realize the benefit of the deferred income tax assets and, therefore, no such
valuation allowance has been established.
4. STOCKHOLDER'S EQUITY
Retained earnings available for distribution as dividends to AEFC are limited to
the Company's surplus as determined in accordance with accounting practices
prescribed by state insurance regulatory authorities. The Company's statutory
unassigned surplus aggregated $1,323,324 and $1,262,335 as of December 31, 2002
and 2001, respectively (see Note 3 with respect to the income tax effect of
certain distributions). In addition, any dividend distributions in 2003 in
excess of $240,838 would require approval of the Department of Commerce of the
State of Minnesota.
Statutory net income (loss) for the years ended December 31 and capital and
surplus as of December 31 are summarized as follows:
2002 2001 2000
Statutory net income (loss) $ 159,794 $ (317,973) $ 344,973
Statutory capital and surplus 2,408,379 1,947,350 1,778,306
--------- --------- ---------
The National Association of Insurance Commissioners (NAIC) revised the
Accounting Practices and Procedures Manual in a process referred to as
Codification. The revised regulations took effect January 1, 2001. The
domiciliary states of the Company and its insurance subsidiaries adopted the
provisions of the revised manual, with the exception of certain provisions not
adopted by its subsidiaries organized in the state of New York. The revised
manual changed, to some extent, prescribed statutory accounting practices and
resulted in changes to the accounting practices that the Company uses to prepare
its statutory-basis financial statements. The impact of implementing these
changes was a decrease of $39,997 to the Company's statutory-basis capital and
surplus as of January 1, 2001. Effective January 1, 2002 the Company's
subsidiaries organized in the state of New York adopted additional provisions of
the manual which resulted in an increase of $5,597 to the Company's
statutory-basis capital and surplus as of January 1, 2002.
5. RELATED PARTY TRANSACTIONS
The Company loans funds to AEFC under a collateral loan agreement. The balance
of the loan was $nil at December 31, 2002 and 2001. This loan can be increased
to a maximum of $75,000 and pays interest at a rate equal to the preceding
month's effective new money rate for the Company's permanent investments.
Interest income on related party loans totaled $nil in 2002, 2001 and 2000.
The Company participates in the American Express Company Retirement Plan which
covers all permanent employees age 21 and over who have met certain employment
requirements. Company contributions to the plan are based on participants' age,
years of service and total compensation for the year. Funding of retirement
costs for this plan complies with the applicable minimum funding requirements
specified by ERISA. The Company's share of the total net periodic pension cost
was $294, $263 and $250 in 2002, 2001 and 2000, respectively.
The Company also participates in defined contribution pension plans of American
Express Company which cover all employees who have met certain employment
requirements. Company contributions to the plans are a percent of either each
employee's eligible compensation or basic contributions. Costs of these plans
charged to operations in 2002, 2001 and 2000 were $1,411, $662 and $1,707,
respectively.
IDS Life Insurance Company
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The Company participates in defined benefit health care plans of AEFC that
provide health care and life insurance benefits to retired employees and retired
financial advisors. The plans include participant contributions and service
related eligibility requirements. Upon retirement, such employees are considered
to have been employees of AEFC. AEFC expenses these benefits and allocates the
expenses to its subsidiaries. The cost of these plans charged to operations in
2002, 2001 and 2000 was $1,835, $1,011 and $1,136, respectively.
Charges by AEFC for use of joint facilities, technology support, marketing
services and other services aggregated $526,081, $505,526 and $582,836 for 2002,
2001 and 2000, respectively. Certain of these costs are included in DAC.
Expenses allocated to the Company may not be reflective of expenses that would
have been incurred by the Company on a stand-alone basis.
Included in other liabilities at December 31, 2002 and 2001 are $55,602 and
$68,919, respectively, payable to AEFC for federal income taxes.
6. LINES OF CREDIT
The Company has available lines of credit with AEFC aggregating $200,000
($100,000 committed and $100,000 uncommitted). The interest rate for any
borrowings is established by reference to various indices plus 20 to 45 basis
points, depending on the term. There were no borrowings outstanding under this
agreement at December 31, 2002 and 2001.
7. COMMITMENTS AND CONTINGENCIES
At December 31, 2002, 2001 and 2000, traditional life and universal life-type
insurance in force aggregated $119,173,734, $108,255,014 and $98,060,472
respectively, of which $38,008,734, $25,986,706 and $17,429,851 was reinsured at
the respective year ends. The Company also reinsures a portion of the risks
assumed under long-term care policies. Under all reinsurance agreements,
premiums ceded to reinsurers amounted to $129,345, $114,534 and $89,506 and
reinsurance recovered from reinsurers amounted to $60,567, $43,388, and $32,500
for the years ended December 31, 2002, 2001 and 2000, respectively. Reinsurance
contracts do not relieve the Company from its primary obligation to
policyholders.
At December 31, 2002, the Company had no commitments to purchase investments
other than mortgage loan fundings (see Note 2).
The Company is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
affect on the Company.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, alleging improper life insurance
sales practices, alleged agent misconduct, failure to properly supervise agents
and other matters relating to life insurance policies and annuity contracts. The
Company and its affiliates were named defendants in three purported class-action
lawsuits alleging improper insurance and annuity sales practices including
improper replacement of existing annuity contracts and insurance policies,
improper use of annuities to fund tax deferred contributory retirement plans,
alleged agent misconduct, failure to properly supervise agents and other matters
relating to life insurance policies and annuity contracts. A fourth lawsuit was
filed against the Company and its affiliates in federal court. In January 2000,
AEFC reached an agreement in principle to settle the four class action lawsuits
described above. It is expected the settlement will provide $215,000 of benefits
to more than two million participants in exchange for a release by class members
of all insurance and annuity state and federal market conduct claims dating back
to 1985. The settlement received court approval. Implementation of the
settlement commenced October 15, 2001 and is substantially complete. Claim
review payments have been made. Numerous individuals opted out of the settlement
described above and therefore did not release their claims against AEFC and its
subsidiaries. Some of these class members who opted out were represented by
counsel and presented separate claims to AEFC and the Company. Most of their
claims have been settled.
The outcome of any litigation or threatened litigation cannot be predicted with
any certainty. However, in the aggregate, the Company does not consider any
lawsuits in which it is named as a defendant to have a material impact on the
Company's financial position or operating results.
The IRS routinely examines the Company's federal income tax returns and is
currently conducting an audit for the 1993 through 1996 tax years. Management
does not believe there will be a material adverse effect on the Company's
consolidated financial position as a result of these audits.
IDS Life Insurance Company
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8. DERIVATIVE FINANCIAL INSTRUMENTS
The Company maintains an overall risk management strategy that incorporates the
use of derivative instruments to minimize significant unplanned fluctuations in
earnings caused by interest rate and equity market volatility. The Company does
not enter into derivative instruments for speculative purposes. As prescribed by
SFAS No. 133, derivative instruments that are designated and qualify as hedging
instruments are classified as cash flow hedges, fair value hedges, or hedges of
a net investment in a foreign operation, based upon the exposure being hedged.
The Company currently has economic hedges that either do not qualify or are not
designated for hedge accounting treatment under SFAS No. 133.
The Company enters into interest rate swaps, caps and floors to manage the
Company's interest rate risk and options and futures to manage equity-based
risk. The values of derivative financial instruments are based on market values,
dealer quotes or pricing models.
Market risk is the possibility that the value of the derivative financial
instruments will change due to fluctuations in a factor from which the
instrument derives its value, primarily an interest rate or equity market index.
The Company is not impacted by market risk related to derivatives held for non-
trading purposes beyond that inherent in cash market transactions. Derivatives
held for purposes other than trading are largely used to manage risk and,
therefore, the cash flow and income effects of the derivatives are inverse to
the effects of the underlying transactions. Credit risk is the possibility that
the counterparty will not fulfill the terms of the contract. The Company
monitors credit risk related to derivative financial instruments through
established approval procedures, including setting concentration limits by
counterparty, and requiring collateral, where appropriate. A vast majority of
the Company's counterparties are rated A or better by Moody's and Standard &
Poor's.
Interest rate caps, swaps and floors are primarily used to protect the margin
between interest rates earned on investments and the interest rates credited to
related annuity contract holders. No interest rate swaps or floors were
outstanding as of December 31, 2002. The interest rate caps expire in January
2003. The fair value of the interest rate caps is included in Other assets.
Changes in the value of the interest rate caps are included in Other insurance
and operating expenses.
A purchased (written) option conveys the right (obligation) to buy or sell an
instrument at a fixed price for a set period of time or on a specific date. The
Company writes and purchases index options to manage the risks related to
annuity products that pay interest based upon the relative change in a major
stock market index between the beginning and end of the product's term
(equity-indexed annuities). The Company views this strategy as a prudent
management of equity market sensitivity, such that earnings are not exposed to
undue risk presented by changes in equity market levels.
The equity indexed annuities contain embedded derivatives, essentially the
equity based return of the product, which must be separated from the host
contract and accounted for as derivative instruments per SFAS No. 133. As a
result of fluctuations in equity markets, and the corresponding changes in value
of the embedded derivatives, the amount of interest credited incurred by the
Company related to the annuity product will positively or negatively impact
reported earnings.
The purchased and written options are carried at fair value and included in
Other assets and Other liabilities, respectively. The fair value of the embedded
options are included in Future policy benefits for fixed annuities. The changes
in fair value of the options are recognized in Other insurance and operating
expenses and the embedded derivatives are recognized in Interest credited on
universal life-type insurance and investment contracts. The purchased and
written options expire on various dates through 2009.
The Company also purchases futures to hedge its obligations under equity indexed
annuities. The futures purchased are marked-to-market daily and exchange traded,
exposing the Company to no counterparty risk. The futures contracts mature in
2003.
Index options may be used to manage the equity market risk related to the fee
income that the Company receives from its separate accounts and the underlying
mutual funds. The amount of the fee income received is based upon the daily
market value of the separate account and mutual fund assets. As a result, the
Company's fee income could be impacted significantly by fluctuations in the
equity market. There are no index options outstanding as of December 31, 2002
related to this strategy.
IDS Life Insurance Company
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9. FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company discloses fair value information for financial instruments for which
it is practicable to estimate that value. Fair values of life insurance
obligations and all non-financial instruments, such as DAC, are excluded.
Off-balance sheet intangible assets, such as the value of the field force, are
also excluded. Management believes the value of excluded assets and liabilities
is significant. The fair value of the Company, therefore, cannot be estimated by
aggregating the amounts presented.
[Enlarge/Download Table]
2002 2001
Carrying Fair Carrying Fair
Financial Assets value value value value
Fixed maturities $24,052,104 $24,052,104 $20,157,137 $20,157,137
Common stocks 21 21 1,704 1,704
Mortgage loans on real estate 3,417,651 3,815,362 3,680,394 3,845,950
Cash and cash equivalents 4,424,061 4,424,061 1,150,251 1,150,251
Other investment 110,574 108,813 75,721 75,721
Derivatives 24,016 24,016 34,477 34,477
Separate account assets 21,980,674 21,980,674 27,333,697 27,333,697
---------- ---------- ---------- ----------
Financial Liabilities
Future policy benefits for fixed annuities $21,911,497 $21,282,750 $18,139,462 $17,671,777
Derivatives 9,099 9,099 2,506 2,506
Separate account liabilities 19,391,316 18,539,425 24,280,092 23,716,854
---------- ---------- ---------- ----------
At December 31, 2002 and 2001, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related contracts
carried at $1,432,294 and $1,368,254, respectively, and policy loans of $67,523
and $84,557, respectively. The fair value of these benefits is based on the
status of the annuities at December 31, 2002 and 2001. The fair value of
deferred annuities is estimated as the carrying amount less any applicable
surrender charges and related loans. The fair value for annuities in non-life
contingent payout status is estimated as the present value of projected benefit
payments at rates appropriate for contracts issued in 2002 and 2001.
At December 31, 2002 and 2001, the fair value of liabilities related to separate
accounts is estimated as the carrying amount less any applicable surrender
charges and less variable insurance contracts carried at $2,589,358 and
$3,053,605, respectively.
[AMERICAN EXPRESS(R) LOGO]
IDS LIFE INSURANCE COMPANY
70100 AXP FINANCIAL CENTER
MINNEAPOLIS, MN 55474
(800) 862-7919
S-6164 N (5/03)
PART II. OTHER INFORMATION
Item 1. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
List of financial statements filed as part of this Post-Effective
Amendment to the Registration Statement.
Financial Statements included in the prospectus, Part I:
IDS Life Insurance Company:
Report of Independent Auditors dated Jan. 27, 2003.
Consolidated Balance Sheets as of Dec. 31, 2002, and 2001.
Consolidated Statements of Income for the years ended Dec. 31,
2002, 2001 and 2000.
Consolidated Statements of Stockholder's Equity for the three
years ended Dec. 31, 2002.
Consolidated Statements of Cash Flows for the years ended
Dec. 31, 2002, 2001 and 2000.
Notes to Consolidated Financial Statements.
(b) Exhibits
1. Resolution of the Executive Committee of the Board of Directors of
Investors Syndicate Life Insurance and Annuity Company dated May 10,
1968, filed as Exhibit 1 to Registrant's Registration Statement No.
2-29081 filed on May 16, 1968, and refiled electronically April 27,
1994 as Exhibit 1 with Post-effective Amendment No. 56, is
incorporated herein by reference.
2. Amended and Restated Regulations of IDS Life Variable Annuity Fund A,
dated June 22, 1979, filed as Exhibit 2 to Registrant's Post-Effective
Amendment No. 32 to Registration Statement No. 2-29081 filed on
December 10, 1979, and refiled electronically on or about April 11,
1995 are incorporated herein by reference.
3. Not applicable.
4. Contracts filed as Exhibit 4 to Registrant's Post-Effective Amendment
No. 32 to Registration Statement No. 2-29081 filed on December 10,
1979, are incorporated herein by reference.
5. Investment Management Services Agreement between Registrant and
American Express Financial Corporation, dated December 1, 2002, is
filed electronically herewith.
6. Distribution and Services Agreement between Registrant and IDS Life
Insurance Company, dated January 12, 1984, filed as Exhibit 6 to
Registrant's Post-Effective Amendment No. 44, and refiled
electronically April 27, 1994 as Exhibit 6 with Post-Effective
Amendment No. 56, is incorporated herein by reference.
7. None.
8.(a) Custodian Agreement between IDS Life Variable Annuity Funds A and B
and IDS Bank & Trust, dated July 12, 1990, filed as Exhibit 8(a) to
Registrant's Post-Effective Amendment No. 53 to this Registration
Statement, filed April 15, 1991, and refiled electronically April 27,
1994 as Exhibit 8(a) with Post-Effective Amendment No. 56, is
incorporated herein by reference.
8.(b) Custodian Agreement, dated May 13, 1999, between American Express
Trust Company and The Bank of New York is incorporated by reference to
Exhibit (g)(3) to IDS Precious Metals Fund, Inc. Post-Effective
Amendment No. 33 to Registration Statement File No. 2-93745 filed on
or about May 24, 1999.
8.(c) Custodian Agreement First Amendment between American Express Trust
Company and The Bank of New York, dated December 1, 2000, filed
electronically as Exhibit (g)(4) to AXP Precious Metals Fund, Inc.
Post-Effective Amendment No. 37 to Registration Statement No. 2-93745,
filed on or about May 28, 2002 is incorporated herein by reference.
8.(d) Custodian Agreement Second Amendment between American Express Trust
Company and The Bank of New York, dated June 7, 2001, filed
electronically as Exhibit (g)(5) to AXP Precious Metals Fund, Inc.
Post-Effective Amendment No. 37 to Registration Statement No. 2-93745,
filed on or about May 28, 2002 is incorporated herein by reference.
8.(e) Custodian Agreement Amendment between American Express Trust Company
and The Bank of New York, dated January 31, 2002, filed electronically
as Exhibit (g)(6) to AXP Precious Metals Fund, Inc. Post-Effective
Amendment No. 37 to Registration Statement No. 2-93745, filed on or
about May 28, 2002 is incorporated herein by reference.
9. Not applicable.
10. Opinion of counsel and consent to its use as to the legality of the
securities being registered is filed electronically herewith.
11. Consent of Independent Auditors is filed electronically herewith.
12. through 15: Not applicable.
16.(a) Code of Ethics adopted under Rule 17j-1 for Registrant filed
electronically as Exhibit 16(a) to Post-Effective Amendment No. 67 to
Registration Statement No. 2-29081, is incorporated herein by
reference.
16.(b) Code of Ethics adopted under Rule 17j-1 for Registrant's investment
adviser and principal underwriter, dated July 2002, filed
electronically on or about Nov. 20, 2002 as Exhibit (p)(2) to AXP
Progressive Series, Inc. Post-Effective Amendment No. 72 to
Registration Statement No. 2-30059 is incorporated herein by
reference.
17.(a) IDS Life Variable Annuity Fund A Power of Attorney to sign Amendments
to this Registration Statement, dated April 25, 2001, filed
electronically as Exhibit 17(a) to Post-Effective Amendment No. 67 to
Registration Statement No. 2-29081, is incorporated herein by
reference.
17.(b) IDS Life Variable Annuity Fund A Power of Attorney to sign
Amendments to this Registration Statement, dated April 22, 2002, filed
electronically as Exhibit 17(b) to Post-Effective Amendment No. 67 to
Registration Statement No. 2-29081, is incorporated herein by
reference.
17.(c) IDS Life Variable Annuity Fund A Power of Attorney to sign
Amendments to this Registration Statement, dated April 16, 2003, is
filed electronically herewith.
17.(d) IDS Life Insurance Company Power of Attorney, dated April 9, 2002,
filed electronically as Exhibit 17(c) to Post-Effective Amendment No.
67 to Registration Statement No. 2-29081, is incorporated herein by
reference.
17.(e) IDS Life Insurance Company Power of Attorney, dated Sept. 11, 2002,
is filed electronically herewith.
17.(f) IDS Life Insurance Company Power of Attorney, dated April 16, 2003,
is filed electronically herewith.
Item 2. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Both the Registrant and IDS Life Variable Annuity Fund B are separate
accounts of IDS Life Insurance Company. Consequently, the securities and funds
of the Registrant and Fund B are technically those of IDS Life, even though the
securities and funds of the two Funds are maintained as separate accounts under
Minnesota Law pursuant to a safekeeping agreement with American Express Trust
Company. As separate accounts, Minnesota Law provides that the assets of the
Funds are not chargeable with liabilities arising out of any other business of
IDS Life and are held for the exclusive benefit of owners of variable annuity
contracts based on the Funds.
Item 3. NUMBER OF HOLDERS OF SECURITIES
Number of Record Holders
Title of Class as of March 31, 2003
-------------- --------------------
Variable Annuities 7,692
Item 4. INDEMNIFICATION
The Regulations of the Registrant provide that each member of the Board of
Managers and each Officer of the Fund shall be indemnified by IDS Life, of which
the Fund is a separate account, for reasonable costs and expenses actually and
necessarily incurred in defense of any action, suit or proceedings where the
defendant is a party by reason of being a Manager or Officer. No indemnification
will be forthcoming in the event of an adjudication of willful misfeasance, bad
faith, gross negligence or reckless disregard by the Officer or Manager of the
duties of his office.
In the absence of an adjudication expressly absolving the Officer or Manager of
the afore-detailed wrongful conduct, indemnification may still be advanced
should 2/3 of the members of the Board of Directors of IDS Life who were not
involved in the processing resolve there was no instance of such wrongful
conduct. In the instance of such a resolution, the indemnification claim still
must be found to be reasonable in amount and proper in presentation by
independent counsel of IDS Life. Should any proceeding be settled,
indemnification shall not exceed the costs, fees and expenses which would have
been incurred had the proceeding been litigated. The payment of indemnification
by IDS Life will not prevent a variable contract holder from challenging the
payment by appropriate legal action on the basis that the payment was improper
because of willful misfeasance, bad faith, gross negligence or reckless
disregard by an Officer or Manager of his duties.
The amended and restated By-Laws of Registrant's investment manager and
principal underwriter, IDS Life, provide that IDS Life will indemnify, to the
fullest extent now or hereafter provided for or permitted by law, each person
involved in, or made or threatened to be made a party to, any action, suit,
claim or proceeding, whether civil or criminal, including any investigative,
administrative, legislative, or other proceeding, and including any action by or
in the right of IDS Life or any other corporation, or any partnership, joint
venture, trust, employee benefit plan, or other enterprise (any such entity,
other than IDS Life, being hereinafter referred to as an "Enterprise"), and
including appeals therein (any such action or process being hereinafter referred
to as a "Proceeding"), by reason of the fact that such person, such person's
testator or intestate (i) is or was a director or officer of IDS Life, or (ii)
is or was serving, at IDS Life's request, as a director, officer, or in any
other capacity, or any other Enterprise, against any and all judgments, amounts
paid in settlement, and expenses, including attorney's fees, actually and
reasonably incurred as a result of or in connection with any Proceeding, except
as provided below.
No indemnification will be made to or on behalf of any such person if a judgment
or other final adjudication adverse to such person establishes that such
person's acts were committed in bad faith or were the result of active and
deliberate dishonesty and were material to the cause of action so adjudicated,
or that such person personally gained in fact a financial profit or other
advantage to which such person was not legally entitled. In addition, no
indemnification will be made with respect to any Proceeding initiated by any
such person against IDS Life or one of its directors or officers, other than to
enforce the terms of this indemnification provision, unless such Proceeding was
authorized by IDS Life's Board of Directors. Further, no indemnification will be
made with respect to any settlement or compromise of any Proceeding unless and
until IDS Life has consented to such settlement or compromise.
IDS Life may, from time to time, with the approval of its Board of Directors,
and to the extent authorized, grant rights to indemnification, and to the
advancement of expenses, to any of its employees or agents or to any person
serving at its request as a director or officer, or in any other capacity, of
any other Enterprise, to the fullest extent of the provisions with respect to
the indemnification and advancement of expenses IDS Life's directors and
officers.
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of IDS Life or the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a manager, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such manager, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 5. Business and Other Connections of Investment Adviser (American Express
Financial Corporation)
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Item 5. Business and Other Connections of Investment Adviser (American Express Financial Corporation)
Directors and officers of American Express Financial Corporation who are
directors and/or officers of one or more other companies:
Name and Title Other company(s) Address* Title within other
company(s)
------------------------- ----------------------- ------------------------- -----------------------
Ruediger Adolf American Express Financial Senior Vice President
Senior Vice President Advisors Inc.
Gumer C. Alvero American Centurion Life 20 Madison Ave. Extension Director and Vice President - Annuities
Vice President - General Assurance Company P.O. Box 5555
Manager Annuities Albany, NY 12205-0555
American Enterprise Life Director, Chairman of the Board and
Insurance Company Executive Vice President - Annuities
American Express Financial Vice President - General Manager
Advisors Inc. Annuities
American Partners Life 1751 AXP Financial Center Director, President
Insurance Company Minneapolis MN 55474 and Chief Executive Officer
IDS Life Insurance Company Director and Executive Vice President -
Annuities
IDS Life Insurance Company P.O. Box 5144 Director and Vice President - Annuities
of New York Albany, NY 12205
IDS Life Series Fund, Inc. Director and Chairman of the Board
IDS Life Variable Annuity Manager and Chairman of the Board
Funds A & B
Ward D. Armstrong American Express Financial Senior Vice President -
Senior Vice President - Advisors Inc. Retirement Services and Asset
Retirement Services Management
and Asset Management
American Express Asset Director and President
Management Group Inc.
American Express Service Vice President - Workplace
Corporation Financial Services
American Express Trust Director and Chairman of
Company the Board
Kenwood Capital Management LLC Manager
Northwinds Marketing Director
Group LLC
John M. Baker American Express Financial Vice President - Plan
Vice President - Plan Sponsor Advisors Inc. Sponsor Services
Services
American Express Asset Vice President
Management Group Inc.
American Express Trust Director and Senior Vice President
Company
Dudley Barksdale American Express Financial Vice President - Service
Vice President - Service Advisors Inc. Development
Development
Timothy V. Bechtold American Centurion Life 20 Madison Ave. Extension Director, President and Chief
Vice President - Assurance Company P.O. Box 5555 Executive Officer
Insurance Products Albany, NY 12205-0555
American Express Financial Vice President - Insurance
Advisors Inc. Products
American Express Insurance Director, President and Chief
Agency of Alabama Inc. Executive Officer
American Express Insurance Director, President and Chief
Agency of Arizona Inc. Executive Officer
American Express Insurance Director, President and Chief
Agency of Idaho Inc. Executive Officer
American Express Insurance Director, President and Chief
Agency of Maryland Inc. Executive Officer
American Express Insurance Director, President and Chief
Agency of Massachusetts Inc. Executive Officer
American Express Insurance Director, President and Chief
Agency of Nevada Inc. Executive Officer
American Express Insurance Director, President and Chief
Agency of New Mexico Inc. Executive Officer
American Express Insurance Director and President
Agency of Oklahoma Inc.
American Express Insurance Director, President and Chief
Agency of Wyoming Inc. Executive Officer
American Partners Life Director and Chairman of the Board
Insurance Company
IDS Insurance Agency of Director, President and Chief
Arkansas Inc. Executive Officer
IDS Insurance Agency of Director, President and Chief
Ohio Inc. Executive Officer
IDS Life Insurance Company Director and President
IDS Life Insurance Company P.O. Box 5144 Director, President and Chief
of New York Albany, NY 12205 Executive Officer
IDS Life Series Fund, Inc. Director, President and Chief
Executive Officer
IDS Life Variable Annuity Manager, President and Chief
Funds A & B Executive Officer
IDS REO 1, LLC President
IDS REO 2, LLC President
Arthur H. Berman American Express Senior Vice President - Finance
Senior Vice President - Financial Advisors Inc.
Finance
American Express Director
Trust Company
Walter S. Berman American Express Director
Director, Senior Vice President Certificate Company
and Chief Financial Officer
American Express Financial Director, Senior Vice President
Advisors Inc. and Chief Financial Officer
American Centurion Life Interim Treasurer
Assurance Company
American Enterprise Life Interim Treasurer
Insurance Company
IDS Life Insurance Company Interim Treasurer
IDS Life Insurance Company Interim Treasurer
of New York
Robert C. Bloomer American Express Vice President - Technologies
Vice President - Financial Advisors Inc.
Technologies
Leslie H. Bodell American Express Vice President - Technologies
Vice President - Financial Advisors Inc.
Technologies
Paul V. Bruce American Express Vice President - Compliance
Vice President - Financial Advisors Inc.
Compliance
Kenneth I. Chenault American Express Company American Express Tower Chairman and Chief
Director World Financial Center Operating Officer
New York, NY 10285
Kenneth J. Ciak AMEX Assurance Company Director, President and Chief
Vice President and General Executive Officer
Manager - IDS Property
Casualty American Express Financial Vice President and General
Advisors Inc. Manager - IDS Property
Casualty
American Express Property Director, President and Chief
Casualty Insurance Agency Executive Officer
of Kentucky Inc.
American Express Property Director, President and Chief
Casualty Insurance Agency Executive Officer
of Maryland Inc.
American Express Property Director, President and Chief
Casualty Insurance Agency Executive Officer
of Pennsylvania Inc.
IDS Property Casualty 1 WEG Blvd. Director, President and Chief
Insurance Company DePere, WI 54115 Executive Officer
Paul A. Connolly American Express Financial Vice President - Relationship Leader
Vice President - Retail Advisors Inc. Retail Distribution Services
Distribution Services
James M. Cracchiolo American Express Financial Director, Chairman, President and
Director, Chairman of Advisors Inc. Chief Executive Officer
the Board, President and
Chief Executive Officer
Colleen Curran American Express Financial Vice President and
Vice President and Assistant Advisors Inc. Assistant General Counsel
General Counsel
Luz Maria Davis American Express Financial Vice President -
Vice President - Advisors Inc. Communications
Communications
William V. Elliott American Express Financial Vice President - Financial
Vice President - Financial Advisors Inc. Planning and Advice
Planning and Advice
Benjamin R. Field American Express Vice President - Finance Education &
Vice President - Finance Financial Advisors Inc. Planning
Education & Planning
Giunero Floro American Express Vice President - Creative Services
Vice President - Creative Financial Advisors Inc.
Services
Terrence J. Flynn American Express Vice President - Brokerage Service
Vice President - Brokerage Financial Advisors Inc.
Service Operations
American Enterprise Senior Vice President
Investment Services Inc.
Jeffery P. Fox American Express Vice President - Investment Accounting
Vice President - Financial Advisors Inc.
Investment Accounting
IDS Life Series, Inc. Chief Financial Officer
IDS Life Variable Annuity Chief Financial Officer
Funds A & B
Brenda H. Fraser American Express Financial Executive Vice President -
Executive Vice Advisors Inc. AEFA Products and Corporate Marketing
President - AEFA
Products and IDS Life Insurance Company Director, Chairman of the Board and
Corporate Marketing Chief Executive Officer
American Express Trust Company Vice President
Gordon M. Fines American Express Asset Senior Vice President -
Vice President - Mutual Fund Management Group Inc. Growth Spectrum
Equity Investments
American Express Financial Vice President - Mutual
Advisors Inc. Fund Equity Investments
Peter A. Gallus American Express Financial Vice President -
Vice President - Investment Advisors Inc. Investment Administration
Administration
Kenwood Capital Management LLC Manager
IDS Capital Holdings Inc. Vice President and Controller
Steve Guida American Enterprise Vice President
Vice President - New Investment Services Inc.
Business and Service
American Express Financial Vice President - New
Advisors Inc. Business and Service
Teresa A. Hanratty American Express Financial Senior Vice
Senior Vice Advisors Inc. President - Field Management
President - Field Management
Lorraine R. Hart AMEX Assurance Company Vice President -
Vice President - Insurance Investments
Investments
American Centurion Life 20 Madison Ave. Extension Vice President - Investments
Assurance Company P.O. Box 5555
Albany, NY 12205-0555
American Enterprise Life 829 AXP Financial Center Vice President - Investments
Insurance Company Minneapolis, MN 55474
American Enterprise 829 AXP Financial Center Vice President
REO 1, LLC Minneapolis, MN 55474
American Express Vice President - Investments
Certificate Company
American Express Director, President and Chief
Corporation Executive Officer
American Express International Vice President - Investments
Deposit Company
American Express Financial Vice President - Insurance
Advisors Inc. Investments
American Express Vice President - Investments
International Deposit
Company
American Partners Life 1751 AXP Financial Center Director and Vice
Insurance Company Minneapolis, MN 55474 President - Investments
IDS Life Insurance Company Vice President - Investments
IDS Life Insurance Company P.O. Box 5144 Vice President - Investments
of New York Albany, NY 12205
IDS Life Series Fund, Inc. Vice President - Investments
IDS Life Variable Annuity Vice President - Investments
Funds A and B
IDS Property Casualty 1 WEG Blvd. Vice President - Investment Officer
Insurance Company DePere, WI 54115
IDS REO 1, LLC Vice President
IDS REO 2, LLC Vice President
Investors Syndicate Director and Vice
Development Corp. President - Investments
Janis K. Heaney American Express Financial Vice President - Incentive
Vice President - Incentive Advisors Inc. Management
Management
Brian M. Heath American Express Financial Senior Vice President and
Senior Vice President Advisors Inc. General Sales Manager
and General Sales Manager
Henry Heitman American Express Financial Vice President - Brokerage
Vice President - Brokerage Advisors Inc. Product Development
Product Development
Carol A. Holton American Centurion Life 20 Madison Ave. Extension Director
Vice President - Third Party Assurance Company Albany, NY 12205-0555
Distribution
American Enterprise Life 829 AXP Financial Center Director, President and
Insurance Company Minneapolis, MN 55474 Chief Executive Officer
American Enterprise 829 AXP Financial Center Vice President
REO 1, LLC Minneapolis, MN 55474
American Express Financial Vice President - Third
Advisors Inc. Party Distribution
IDS Life Insurance Company 20 Madison Ave. Extension Director
of New York P.O. Box 5555
Albany, NY 12205-0555
Claire L. Huang American Express Financial Senior Vice President -
Senior Vice President - Advisors Inc. Retail Marketing
Retail Marketing
Debra A. Hutchinson American Express Financial Vice President - Technology
Vice President - Technology Advisors Inc. Relationship Leader
Relationship Leader
James M. Jensen American Express Financial Vice President - Advice
Vice President - Advice and Advisors Inc. and Retail Distribution
Retail Distribution Group, Group Product,
Product, Compensation and Compensation and Field
Field Administration Administration
Nancy E. Jones American Express Vice President - Business Development
Vice President - Financial Advisors Inc.
Business Development
William A. Jones American Express Vice President - Technologies
Vice President - Financial Advisors Inc.
Technologies
John C. Junek American Express Financial Senior Vice President and
Senior Vice President Advisors Inc. General Counsel
and General Counsel
American Express Financial Vice President
Advisors Japan Inc.
American Express Insurance Director and Vice President
Agency of Alabama Inc.
American Express Insurance Director and Vice President
Agency of Arizona Inc.
American Express Insurance Director and Vice President
Agency of Idaho Inc.
American Express Insurance Director and Vice President
Agency of Maryland Inc.
American Express Insurance Director and Vice President
Agency of Massachusetts Inc.
American Express Insurance Director and Vice President
Agency of Nevada Inc.
American Express Insurance Director and Vice President
Agency of New Mexico Inc.
American Express Insurance Director and Vice President
Agency of Oklahoma Inc.
American Express Insurance Director and Vice President
Agency of Wyoming Inc.
American Express Property Director and Vice President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Director and Vice President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Director and Vice President
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Director and Vice President
Arkansas Inc.
Investors Syndicate Director
Development Corp.
Ora J. Kaine American Express Financial Vice President - Retail
Vice President - Retail Advisors Inc. Distribution Services and
Distribution Services and Chief of Staff
Chief of Staff
Michelle M. Keeley American Express Senior Vice President - Fixed Income
Senior Vice President - Financial Advisors Inc.
Fixed Income
American Express Asset Director
Management Group, Inc.
Claire Kolmodin American Express Financial Vice President - Service
Vice President - Service Advisors Inc. Quality
Quality
Lori J. Larson American Express Financial Vice President - Brokerage
Vice President - Brokerage Advisors Inc. and Direct Services
and Direct Services
Daniel E. Laufenberg American Express Financial Vice President and Chief
Vice President and Chief Advisors Inc. U.S. Economist
U.S. Economist
Jane W. Lee American Express Financial Vice President - New
Vice President - New Business Advisors Inc. Business Development and
Development and Marketing Marketing
Catherine M. Libbe American Express Vice President - Marketing & Product
Vice President - Financial Advisors Inc. Services
Marketing & Product
Services
Judd K. Lohmann American Express Property Treasurer
Treasurer Casualty Insurance Agency
IDS Life Series Fund, Inc. Treasurer
IDS Life Variable Annuity Treasurer
Funds A & B
Diane D. Lyngstad American Express Financial Vice President - Lead
Vice President - Lead Advisors Inc. Financial Officer,
Financial Officer, U.S. Retail Group
U.S. Retail Group
American Express Client Vice President and Chief
Service Corporation Financial Officer
Thomas A. Mahowald American Express Financial Vice President and Director of
Vice President and Director of Advisors Inc. Equity Research
Equity Research
Timothy J. Masek American Express Financial Vice President and Director
Vice President and Director Advisors Inc. of Fixed Income Research
of Fixed Income Research
Penny Mazal American Express Financial Vice President - Business
Vice President - Business Advisors Inc. Transformation
Transformation
Mark T. McGannon American Express Financial Vice President and General
Vice President and Advisors Inc. Sales Manager - AEFA Products
General Sales
Manager - AEFA Products
Brian J. McGrane American Express Vice President - LFO Finance
Vice President - Financial Advisors Inc.
LFO Finance
Advisory Capital Partners LLC Vice President and Chief Financial
Officer
Advisory Capital Vice President and Chief Financial
Strategies Group Inc. Officer
Advisory Convertible Vice President and Chief Financial
Arbitrage LLC Officer
Advisory Quantitative Equity Vice President and Chief Financial
(General Partner) LLC Officer
Advisory Select LLC Vice President and Chief Financial
Officer
American Express Asset Vice President and Chief Financial
Management Group Inc. Officer
Sarah M. McKenzie American Express Financial Vice President -
Vice President - Advisors Inc. Managed and Brokerage Products
Managed and Brokerage
Products American Express Personal Director
Trust Services, FSB
Timothy S. Meehan American Express Secretary
Secretary Financial Advisors Inc.
American Enterprise Investment Services Secretary
American Enterprise REO 1, LLC Secretary
American Express Asset Secretary
Management Group Inc.
American Express Asset Secretary
Management International Inc.
American Express Client Service Secretary
Corporation
American Express Corporation Secretary
American Express Financial Secretary
Advisors Inc. Japan
American Express Insurance Director, Vice President and Secretary
Agency of Alabama Inc.
American Express Insurance Director, Vice President and Secretary
Agency of Arizona Inc.
American Express Insurance Director, Vice President and Secretary
Agency of Idaho Inc.
American Express Insurance Director, Vice President and Secretary
Agency of Maryland Inc.
American Express Insurance Director, Vice President and Secretary
Agency of Massachusetts Inc.
American Express Insurance Director, Vice President and Secretary
Agency of Nevada Inc.
American Express Insurance Director, Vice President and Secretary
Agency of New Mexico Inc.
American Express Insurance Director, Vice President and Secretary
Agency of Oklahoma Inc.
American Express Insurance Director, Vice President and Secretary
Agency of Wyoming Inc.
American Express Personal Secretary
Trust Services, FSB
American Express Property Secretary
Casualty Insurance Agency
American Express Property Casualty Director, Vice President
Insurance Agency of Kentucky Inc. and Secretary
American Express Property Casualty Director, Vice President
Insurance Agency of Maryland Inc. and Secretary
American Express Property Casualty Director, Vice President
Insurance Agency of Pennslyvania Inc. and Secretary
Amex Assurance Company Secretary
IDS Cable Corporation Secretary
IDS Cable II Corporation Secretary
IDS Capital Holdings Inc. Secretary
IDS Insurance Company of Arkansas Secretary
IDS Life Insurance Company Secretary
IDS Management Corporation Secretary
IDS Partnership Services Corporation Secretary
IDS Realty Company Secretary
IDS REO 1, LLC Secretary
IDS REO 2, LLC Secretary
Investors Syndicate Development Corp. Secretary
Paula R. Meyer American Express Financial Senior Vice President and General
Senior Vice President Advisors Inc. Manager - Mutual Funds
and General
Manager - Mutual Funds American Express Certificate Director, President Chairman of the
Company Board and Chief Executive Officer
American Express Director and President
International Deposit
Company
American Express Director
Trust Company
Investors Syndicate Director, President and Chief
Development Corp. Executive Officer
Jeryl A. Millner American Express Financial Vice President - LFO, Insurance,
Vice President LFO, Advisors Inc. Annuities and Certificates
Insurance, Annuities
and Certificates American Centurion Life Vice President and Controller
Assurance Company
American Enterprise Life Vice President and Controller
Insurance Company
American Partners Life Vice President and Controller
Insurance Company
IDS Life Insurance Company Vice President and Controller
IDS Life Insurance Company Vice President and Controller
of New York
IDS Life Series Fund, Inc. Vice President and Controller
IDS Life Variable Annuity Vice President and Controller
Funds A & B
Barry J. Murphy American Express Client Director, Chairman of the Board,
Executive Vice President - Service Corporation President and Chief Executive Officer
U.S. Retail Group
American Express Financial Executive Vice President -
Advisors Inc. U.S. Retail Group
IDS Life Insurance Company Director
Francois B. Odouard American Express Financial Vice President - Brokerage
Vice President - Advisors Inc.
Brokerage
Michael J. O'Keefe American Express Financial Vice President - Advisory
Vice President - Advisory Advisors Inc. Business Systems
Business Systems
Kris Petersen American Express Financial Vice President - SPS and
Vice President - SPS and Advisors Inc. External Products
External Products
IDS Cable Corporation Director, President and Chief Executive
Officer
IDS Cable II Corporation Director, President and Chief Executive
Officer
IDS Futures Corporation Director, President and Chief Executive
Officer
IDS Management Corporation Director, President and Chief Executive
Officer
IDS Partnership Services Director, President and Chief Executive
Corporation Officer
IDS Realty Corporation Director, President and Chief Executive
Officer
Ronald W. Powell American Express Financial Vice President and
Vice President and Assistant Advisors Inc. Assistant General Counsel
General Counsel
Kenwood Capital Management LLC Chief Legal Officer
Teresa J. Rasmussen American Express Financial Vice President and
Vice President and Assistant Advisors Inc. Assistant General Counsel
General Counsel
American Centurion Life Counsel and Secretary
Assurance Company
American Enterprise Life Director
Insurance Company
American Express Corporation Director, Vice President and Secretary
IDS Life Insurance Company Vice President and General Counsel
IDS Life Insurance Company 20 Madison Ave. Extension Assistant General Counsel and
of New York Albany, NY 12205-0555 Assistant Secretary
American Partners Director, Vice President,
Life Insurance Company General Counsel and Secretary
Daniel J. Rivera American Express Vice President - Senior Portfolio Manager
Vice President - Senior Financial Advisors Inc.
Portfolio Manager
American Asset Director
Management Group Inc.
ReBecca K. Roloff American Express Financial Senior Vice President -
Senior Vice President - Advisors Inc. Field Management and
Field Management Financial Advisory Services
and Financial Advisory
Services
Stephen W. Roszell Advisory Capital Income LLC Director
Senior Vice President -
Institutional Advisory Capital Director
Group Partners LLC
Advisory Capital Director
Strategies Group Inc.
Advisory Select LLC Director
American Express Asset Director, President and
Management Group Inc. Chief Executive Officer
American Express Asset Director and Executive Vice President
Management International,
Inc.
American Express Asset Director
Management International,
(Japan) Ltd.
American Express Asset Director
Management Ltd.
American Express Financial Senior Vice President -
Advisors Inc. Institutional
American Express Financial Director
Advisors Japan Inc.
American Express Trust Director
Company
IDS Life Insurance Company Director
Northwinds Marketing Director
Group LLC
Andrew C. Schell American Express Financial Vice President - Client
Vice President - Client Advisors Inc. Development and Migration
Development and Migration
Peter B. Schofield American Express Vice President - Auditing
Vice President - Auditing Financial Advisors Inc.
Gary A. Scott American Express Vice President - Client Acquisition
Vice President - Financial Advisors Inc. Marketing
Client Acquisition
Marketing
Bridget Sperl American Enterprise Director, President and Chief
Senior Vice President - Investment Services Inc. Executive Officer
Client Service
American Express Client Director and Senior Vice President
Service Corporation
American Express Financial Senior Vice President -
Advisors Inc. Client Service
IDS Life Insurance Company Executive Vice President -
Client Service
IDS Property Casualty Director
Insurance Company
Lisa A. Steffes American Express Financial Vice President - Marketing
Vice President - Marketing Advisors Inc. Offer Development
Offer Development
AMEX Assurance Company Director
IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
David K. Stewart American Express Vice President - AEFA Controller
Vice President - Financial Advisors Inc.
AEFA Controller
Caroline Stockdale-Boon American Express Senior Vice President - Relationship
Senior Vice President - Financial Advisors Inc. Leader of Human Resources
Relationship Leader
of Human Resources
Jeffrey J. Stremcha American Express Financial Vice President -
Vice President - Information Advisors Inc. Information Resource
Resource Management/ISD Management/ISD
John T. Sweeney American Express Financial Vice President - Lead
Vice President - Lead Advisors Inc. Financial Officer, Products
Financial Officer, Products
AMEX Assurance Company Director
American Enterprise Vice President - Finance
Life Insurance Company
American Partners Vice President - Finance
Life Insurance Company
IDS Cable Corporation Director
IDS Cable II Corporation Director
IDS Life Insurance Company Director and Executive
Vice President - Finance
IDS Partnership Director
Services Corporation
IDS Property Casualty Director
Insurance Company
IDS Realty Corporation Director
William F. Truscott Advisory Capital Strategies Director
Senior Vice President - Group Inc.
Chief Investment Officer
American Express Asset Director and Chairman of the Board
Management Group Inc.
American Express Asset Director
Management International Inc.
American Express Financial Senior Vice President -
Advisors Inc. Chief Investment Officer
IDS Capital Holdings Inc. Director and President
Kenwood Capital Management LLC Manager
George F. Tsafaridis American Express Vice President - Quality & Service Support
Vice President - Financial Advisors Inc.
Quality & Service Support
Peter S. Velardi American Express Senior Vice President - Field Management
Senior Vice President - Financial Advisors Inc.
Field Management
Andrew O. Washburn American Express Vice President - Mutual Fund Marketing
Vice President - Financial Advisors Inc.
Mutual Fund Marketing
Beth E. Weimer American Express Financial Vice President - Chief Compliance Officer
Chief Compliance Officer Advisors Inc.
American Enterprise Chief Compliance Officer
Investment Services Inc.
American Express Asset Chief Compliance Officer
Management Group Inc.
American Express Asset Chief Compliance Officer
Management International Inc.
American Express Service Chief Compliance Officer
Corporation
IDS Insurance Agency of Chief Compliance Officer
Arkansas Inc.
IDS Life Insurance Company Chief Compliance Officer
Jeffery A. Williams American Express Financial Senior Vice President -
Senior Vice President - Advisors Inc. Cross-Sell/Strategic
Cross-Sell/Strategic Marketing
Marketing
William J. Williams American Express Senior Vice President - Field Management
Senior Vice President - Financial Advisors Inc.
Field Management
Dianne Wilson American Express Vice President - Insurance Operations
Vice President - Financial Advisors Inc.
Insurance Operations
Amex Assurance Company Director and Senior Vice President
IDS Property Casualty Company Director and Senior Vice President
Michael D. Wolf American Express Asset Executive Vice President
Vice President - Senior Management Group Inc.
Portfolio Manager
American Express Financial Vice President - Senior
Advisors Inc. Portfolio Manager
Michael R. Woodward American Express Financial Senior Vice President -
Senior Vice President - Advisors Inc. Field Management
Field Management
American Centurion Life 20 Madison Ave. Extension Director
Assurance Company Albany, NY 12205-0555
American Express Insurance Vice President - North Region
Agency of Alabama Inc.
American Express Insurance Vice President - North Region
Agency of Idaho Inc.
American Express Insurance Vice President - North Region
Agency of Maryland Inc.
American Express Insurance Vice President - North Region
Agency of Massachusetts Inc.
American Express Insurance Vice President - North Region
Agency of Nevada Inc.
American Express Insurance Vice President - North Region
Agency of New Mexico Inc.
American Express Insurance Vice President - North Region
Agency of Oklahoma Inc.
American Express Insurance Vice President - North Region
Agency of Wyoming Inc.
American Express Property Vice President - North Region
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Vice President - North Region
Casualty Insurance Agency
of Maryland Inc.
American Express Property Vice President - North Region
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Vice President - North Region
Arkansas Inc.
IDS Life Insurance Company P.O. Box 5144 Director
of New York Albany, NY 12205
Doretta R. Wright American Express Financial Vice President - Brokerage Marketing
Vice President - Brokerage Advisors Inc.
Marketing
David L. Yowan American Enterprise Vice President and
Vice President and Corporate Investment Services Inc. Treasurer
Treasurer
American Enterprise 829 AXP Financial Center Treasurer
REO 1, LLC Minneapolis, MN 55474
American Express Asset Vice President and
Management Group Inc. Treasurer
American Express Asset Vice President and
Management International Treasurer
Inc.
American Express Vice President and
Certificate Company Treasurer
American Express Client Vice President and
Service Corporation Treasurer
American Express Vice President and
Corporation Treasurer
American Express Financial Vice President and
Advisors Inc. Treasurer
American Express Insurance Vice President and
Agency of Alabama Inc. Treasurer
American Express Insurance Vice President and
Agency of Arizona Inc. Treasurer
American Express Insurance Vice President and
Agency of Idaho Inc. Treasurer
American Express Insurance Vice President and
Agency of Maryland Inc. Treasurer
American Express Insurance Vice President and
Agency of Massachusetts Inc. Treasurer
American Express Insurance Vice President and
Agency of Nevada Inc. Treasurer
American Express Insurance Vice President and
Agency of New Mexico Inc. Treasurer
American Express Insurance Vice President and
Agency of Oklahoma Inc. Treasurer
American Express Insurance Vice President and
Agency of Wyoming Inc. Treasurer
American Express Personal Treasurer
Trust Services, FSB
American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Kentucky Inc.
American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Maryland Inc.
American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Pennsylvania Inc.
American Express Service Vice President and Treasurer
Corporation
AMEX Assurance Company Vice President, Treasurer
and Assistant Secretary
IDS Cable Corporation Director, Vice President and
Treasurer
IDS Cable II Corporation Director, Vice President and
Treasurer
IDS Capital Holdings Inc. Vice President, Treasurer
and Assistant Secretary
IDS Insurance Agency of Vice President and
Arkansas Inc. Treasurer
IDS Management Corporation Director, Vice President
and Treasurer
IDS Partnership Services Vice President and
Corporation Treasurer
IDS Property Casualty 1 WEG Blvd. Vice President, Treasurer
Insurance Company DePere, WI 54115 and Assistant Secretary
IDS Realty Corporation Vice President and
Treasurer
IDS REO 1, LLC Treasurer
Investors Syndicate Vice President and
Development Corporation Treasurer
Kenwood Capital Management LLC Treasurer
* Unless otherwise noted, address is 70100 AXP Financial Center, Minneapolis, MN 55474.
Item 6. PRINCIPAL UNDERWRITERS
Item 6 Principal Underwriter (IDS Life Insurance Company)
(a) IDS Life is the principal underwriter, depositor, sponsor or investment
adviser for IDS Life Variable Annuity Fund A, IDS Life Variable Annuity
Fund B, IDS Life Series Fund, Inc., AXP Variable Portfolio - Income Series,
Inc., AXP Variable Portfolio - Investment Series, Inc., AXP Variable
Portfolio - Managed Series, Inc., AXP Variable Portfolio - Money Market
Series, Inc., AXP Variable Portfolio - Partners Series, Inc., IDS Life
Account MGA, IDS Life Account SBS, IDS Life Accounts F, G, H, IZ, JZ, KZ,
LZ, MZ, N, PZ, QZ, RZ, SZ and TZ, IDS Life Variable Account 10, IDS Life
Variable Life Separate Account and IDS Life Variable Account for Smith
Barney.
(b) As to each director, officer, or partner of the principal underwriter:
[Enlarge/Download Table]
Name and Principal Business Address* Position and Offices with Underwriter Positions and Offices with Registrant
------------------------------------ -------------------------------------- --------------------------------------
Gumer C. Alvero Director and Executive Manager and Chairman of the Board
Vice President - Annuities
Timothy V. Bechtold Director and President Manager, President and Chief Executive
Officer
Barbara H. Fraser Director, Chairman of the Board None
and Chief Executive Officer
Lorraine R. Hart Vice President, Investments Vice President, Investments
Eric L. Marhoun Vice President, Assistant General None
Counsel and Assistant Secretary
Timothy S. Meehan Secretary Assistant Secretary
Jeryl A. Millner Vice President and Controller Controller
Mary Ellyn Minenko Vice President, Assistant General General Counsel and Assistant Secretary
Counsel and Assistant Secretary
Barry J. Murphy Director None
Teresa J. Rasmussen Vice President and General Counsel None
Stephen W. Roszell Director None
Bridget Sperl Executive Vice President - Client None
Service
John T. Sweeney Director and Executive None
Vice President - Finance
* Unless otherwise noted, the business address is 70100 AXP Financial Center,
Minneapolis, MN 55474.
[Download Table]
(c) Net Underwriting Compensation
Name of Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions Compensation
----------------- ---------------- ------------ ----------- ------------
IDS Life Insurance $37,418,102 None None None
Company
Item 7. LOCATION OF ACCOUNTS AND RECORDS
IDS Life Insurance Company
70100 AXP Financial Center
Minneapolis, Minnesota 55474
Item 8. MANAGEMENT SERVICES
Not Applicable.
Item 9. DISTRIBUTION EXPENSES
Not Applicable.
Item 10. UNDERTAKINGS
(a) and (b) These undertakings were filed in Registrant's
initial Registration Statement.
(c) The sponsoring insurance company represents that the fees
and charges deducted under the contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the
insurance company.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, IDS Life Variable Annuity Fund A, certifies
that it meets all of the requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned thereunto duly authorized, in the City of
Minneapolis, and State of Minnesota on the 29th day of April, 2003.
IDS LIFE VARIABLE ANNUITY FUND A
By: /s/ Timothy V. Bechtold**
--------------------------------
Timothy V. Bechtold
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed by the following persons in the
capacities indicated on the 29th day of April, 2003.
Signature Title
/s/ Gumer C. Alvero** Chairman of the Board of Managers
------------------------------------
Gumer C. Alvero
/s/ Timothy V. Bechtold** Member, Board of Managers, President
------------------------------------ and Chief Executive Officer
Timothy V. Bechtold (Chief Executive Officer)
Member, Board of Managers
------------------------------------
Rodney P. Burwell
/s/ Jeffrey P. Fox*** Chief Financial Officer
------------------------------------ (Principal Financial Officer)
Jeffrey P. Fox (Principal Accounting Officer)
/s/ Jean B. Keffeler* Member, Board of Managers
------------------------------------
Jean B. Keffeler
/s/ Thomas R. McBurney* Member, Board of Managers
------------------------------------
Thomas R. McBurney
* Signed pursuant to IDS Life Variable Annuity Fund A Power of Attorney,
dated April 25, 2001, filed electronically as Exhibit 17(a) to
Post-Effective Amendment No. 67 to Registration Statement No. 2-29081, by:
** Signed pursuant to IDS Life Variable Annuity Fund A Power of Attorney,
dated April 22, 2002, filed electronically as Exhibit 17(b) to
Post-Effective Amendment No. 67 to Registration Statement No. 2-29081, by:
*** Signed pursuant to IDS Life Variable Annuity Fund A Power of Attorney,
dated April 16, 2003, filed electronically herewith as Exhibit 17(c), by:
/s/ Mary Ellyn Minenko
---------------------------
Mary Ellyn Minenko
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, IDS Life Insurance Company, on behalf of the Registrant,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Minneapolis, and State of Minnesota on the 29th day
of April, 2003.
IDS LIFE INSURANCE COMPANY
By: /s/ Timothy V. Bechtold*
-----------------------
Timothy V. Bechtold
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed by the following persons in the
capacities indicated on the 29th day of April, 2003.
Signature Title
/s/ Gumer C. Alvero* Director
------------------------------------
Gumer C. Alvero
/s/ Timothy V. Bechtold* Director and President
------------------------------------
Timothy V. Bechtold
/s/ Barbara H. Fraser** Chairman of the Board of Directors
------------------------------------ and Chief Executive Officer
Barbara H. Fraser (Chief Executive Officer)
/s/ Jeryl A. Millner*** Vice President and Controller
------------------------------------ (Principal Accounting Officer)
Jeryl A. Millner
/s/ Barry J. Murphy* Director
------------------------------------
Barry J. Murphy
/s/ Stephen W. Roszell* Director
-----------------------------------
Stephen W. Roszell
/s/ John T. Sweeney* Director and Executive Vice
------------------------------------ President - Finance
John T. Sweeney (Principal Financial Officer)
* Signed pursuant to IDS Life Insurance Company Power of Attorney, dated
April 9, 2002, filed electronically as Exhibit 17(c) to Post-Effective
Amendment No. 67 to Registration Statement No. 2-29081, by:
** Signed pursuant to IDS Life Insurance Company Power of Attorney, dated
September 11, 2002, filed electronically herewith as Exhibit 17(e), by:
*** Signed pursuant to IDS Life Insurance Company Power of Attorney, dated
April 16, 2003, filed electronically herewith as Exhibit 17(f), by:
/s/ Mary Ellyn Minenko
--------------------------------
Mary Ellyn Minenko
CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 68
TO REGISTRATION STATEMENT NO. 2-29081
This Post-Effective Amendment comprises the following papers and documents:
The facing sheet.
Part I.
Prospectus.
Financial Statements.
Part II.
Other Information.
Signatures.
Dates Referenced Herein and Documents Incorporated By Reference
| Referenced-On Page |
|---|
| This 485BPOS Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 1/1/93 | | 5 |
| | 12/31/93 | | 5 | | | | | NSAR-B, N-30D, 24F-2NT |
| | 4/27/94 | | 41 | | 42 |
| | 12/31/94 | | 5 | | | | | NSAR-B, 24F-2NT |
| | 1/1/95 | | 20 |
| | 4/11/95 | | 41 | | | | | 485BPOS |
| | 12/31/95 | | 5 | | | | | N-30D, 24F-2NT, NSAR-B |
| | 12/31/96 | | 5 | | | | | NSAR-B, N-30D, 24F-2NT |
| | 12/31/97 | | 5 | | | | | N-30D, 24F-2NT, NSAR-B |
| | 12/31/98 | | 5 | | | | | NSAR-B, 24F-2NT, N-30D |
| | 5/13/99 | | 42 |
| | 5/24/99 | | 42 |
| | 12/31/99 | | 5 | | | | | N-30D, 24F-2NT, NSAR-B |
| | 1/1/00 | | 25 |
| | 12/1/00 | | 42 |
| | 12/15/00 | | 31 |
| | 12/31/00 | | 5 | | 41 | | | NSAR-B, N-30D, 24F-2NT |
| | 1/1/01 | | 31 | | 36 |
| | 3/31/01 | | 31 |
| | 4/25/01 | | 42 | | 58 |
| | 6/7/01 | | 42 |
| | 10/15/01 | | 21 | | 37 |
| | 12/31/01 | | 5 | | 41 | | | N-30D, 24F-2NT, NSAR-B |
| | 1/1/02 | | 36 |
| | 1/31/02 | | 42 |
| | 4/9/02 | | 42 | | 59 |
| | 4/22/02 | | 42 | | 58 |
| | 5/28/02 | | 42 |
| | 9/11/02 | | 42 | | 59 |
| | 11/13/02 | | 8 | | | | | PRE 14A, DEF 14A |
| | 11/20/02 | | 42 |
| | 12/1/02 | | 15 | | 41 |
| | 12/31/02 | | 5 | | 41 | | | NSAR-B, N-30D, 24F-2NT |
| | 1/27/03 | | 22 | | 41 |
| | 3/31/03 | | 43 |
| | 4/16/03 | | 42 | | 59 |
| Filed On / Filed As Of | | 4/29/03 |
| Effective As Of | | 5/1/03 | | 1 | | 2 | | | 497J |
| | 6/15/03 | | 31 |
| |
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